Reddit faces patent infringement allegations from Nokia ahead of IPO

Allegations before IPO: Reddit, a social media platform, is currently evaluating a letter from Nokia Technologies alleging patent infringement, just days before its highly anticipated initial public offering (IPO) scheduled for later this week.

The disclosure comes in the wake of an inquiry by the Federal Trade Commission (FTC) into Reddit's practices regarding the sale, licensing, and sharing of user-generated content with third parties for the purpose of training artificial intelligence models.

In its statement, Reddit acknowledged the possibility of facing more intellectual property claims against it as it continues to grow in prominence and faces increased competition.

As of now, Nokia has not responded to requests for comment regarding the matter.

Despite Reddit's previous involvement in patent infringement litigation, the company is aiming for a valuation of up to $6.5 billion for its IPO, making it one of the most highly anticipated share sales in recent years.

According to reports from Reuters, the IPO is between four and five times oversubscribed, indicating a strong likelihood of reaching its target valuation. The debut is scheduled for March 21 on the New York Stock Exchange.

Reddit gained significant attention in 2021 for its role in the "meme-stock" saga, particularly through its "wallstreetbets" forum, where retail investors collaborated to purchase shares of heavily shorted companies like GameStop.

To use its popularity among retail investors, Reddit has reserved 8 per cent of the total shares for eligible users, moderators, certain board members, as well as friends and family of its employees and directors.

(With Reuters inputs)