Key Points
- Reddit is projected to reach a $6.5 billion valuation with its initial public offering (IPO).
- The company plans to raise $748 million through the IPO, despite not yet turning a profit.
Reddit, the San Francisco-based social media platform, is expected to reach a valuation of $6.5 billion with its upcoming initial public offering (IPO).
The IPO is currently oversubscribed by four to five times, as per unnamed sources. This figure is a decrease from the $10 billion valuation Reddit achieved in its last fundraising round in August 2021.
Details of Reddit’s IPO
The planned IPO price range is set between $31 and $34 per share. Reddit, which holds Bitcoin (BTC), Ethereum (ETH), and Polygon (MATIC) according to its IPO filing, plans to trade under the ticker RDDT on the New York Stock Exchange.
Despite not yet turning a profit, Reddit intends to raise $748 million through the IPO. The company reported a net income of approximately $18.5 million in the last quarter of 2023, but ended the year with a net loss of $90.8 million.
Share Offering and Major Shareholders
Reddit plans to offer more than 15.2 million shares of its Class A common stock, along with an additional 6.7 million shares offered by selling stockholders. It will also allow some employees to sell shares during the IPO, deviating from the typical lock-up period process. Shares will also be reserved for top users with high “karma,” a measure of user reputation on the platform.
Reddit was sold to media company Condé Nast in 2006. Steve Huffman, Reddit’s co-founder and CEO, owns 3.3% of the company. Other major shareholders include Advance Publications, Condé Nast’s parent company (30.1%), Tencent (11%), and OpenAI CEO Sam Altman (8.7%).
The decision to target a lower valuation comes amid a chilly IPO market. As of Sunday, March 17, 2024, there have been 33 IPOs on the U.S. stock market, a 10% increase from the same period in 2023. In 2023, there were only 1,429 IPOs worldwide, the lowest number since 2019 and a nearly 16% drop from 2022.
