Reddit Stashes Bitcoin and Ethereum on Balance Sheet in IPO Filing

Social media platform Reddit is the latest company to disclose holdings of digital assets on its balance sheet.

In its S-1 filing released February 22nd outlining plans to go public, Reddit said it has invested a portion of excess cash reserves in bitcoin and ether. The allocations represent a vote of confidence in cryptocurrencies from a mainstream tech brand.

TLDR

• Reddit disclosed in its IPO filing that it has invested some of its excess cash reserves in bitcoin and ether.
• The company said it acquired ether and Polygon’s MATIC token as payment for sales of some virtual goods and may continue this.
• Reddit stated the net carrying value of its cryptocurrency holdings were “immaterial” but didn’t specify the number of tokens.
• The filing revealed Reddit had $804 million in revenue in 2023 and $1.6 billion in assets, including $1.3 billion in cash reserves.
• Reddit noted blockchain technology has potential but it’s uncertain if crypto adoption will continue long-term.

While not specifying the number of tokens or dollar amount stored, Reddit stated the net carrying value of its cryptocurrency portfolio was “immaterial” relative to $1.6 billion in total company assets. The bulk of assets were $1.3 billion in cash likely partially converted into the asset allocations.

The news comes after a multi-year process of Reddit preparing to list shares on the New York Stock Exchange under the symbol RDDT, slated for March 2023.

Beyond balance sheet positions, Reddit also revealed experiments with digital assets on the operational side. The company said it acquired and held ether and Polygon’s MATIC tokens as a form of payment for sales of certain virtual goods.

Was very intrigued why a Reddit S-1 hit one of my Bloomberg Alerts that i use to track Crypto ETP filings. It’s because they bought #Bitcoin and #Ethereum???? https://t.co/VS9M3Gslkf pic.twitter.com/oTB1xdrnXN

— James Seyffart (@JSeyff) February 22, 2024

Similar to the investment holdings, Reddit noted the ether and MATIC received from these payment activities was insignificant in scale for 2022 and 2023 results. However, the company hinted at potentially continuing cryptocurrency payment integration where practical going forward.

At the same time, Reddit struck notes of caution on the outlook for mass blockchain adoption. The same filing stated that while cryptocurrencies and blockchain technology show promise, the extent to which they are embraced long-term remains highly uncertain.

The nuanced positioning accords with Reddit’s winding path in the crypto sector. Last October, the firm discontinued its Ethereum-based Community Points program that rewarded users due to scalability limitations and cloudy regulations.

Nonetheless, warming sentiments mirror growing crypto openness across the Fortune 500. Initiatives like the Ethereum Alliance draw blue-chip companies en masse into Web3 spheres, collectively pressuring laggard peers to allocate R&D resources.