Reddit, recognized as a social media entity hosting a myriad of web discussions from ordinary to highly specialized, is looking to price itself at around $6.5 billion for its impending initial public offering (IPO).
The company, together with its current shareholders, will offer around 22 million shares priced between $31 and $34 each, as outlined in a release on Monday. This estimated market cap takes into account a fully diluted share count, not exclusively the shares that will be immediately available.
Reddit has allocated about 1.76 million shares for specific users and moderators, commonly referred to as Redditors, who have shown interest in participating in the IPO and had active accounts before January 1. These Redditors can buy these shares and eventually sell them on the public market as they are exempted from a standard lock-up period that usually restricts investors from trading shares six months post-IPO.
Reddit filed its prospectus in February and expressed plans to list on the New York Stock Exchange with the ticker symbol “RDDT“. Of the 22 million shares to be circulated, Reddit intends to offer about 15.3 million shares, potentially raising $520 million if sold at the maximum price range. Existing stakeholders, CEO Steve Huffman included, aim to sell a cumulative 6.7 million shares.
Investors are eagerly anticipating Reddit’s offering, slated to be this year’s inaugural major tech debut and the first social media IPO since Pinterest in 2019. In 2021, Reddit confidentially lodged a draft for its public offering proposal with the Securities and Exchange Commission (SEC). During the same year, Reddit secured $1.3 billion in funding and was privately valued at $10 billion, as reported by PitchBook, a service that tracks deals.
According to Reddit’s S-1 filing, the company’s 2023 annual sales were $804 million, reflecting a 20% yearly growth from $666.7 million in 2022. It also reported a net loss of $90.8 million for 2023, less than the $158.6 million net loss registered the previous year.
Noteworthy investors in the company comprise of Tencent, Condé Nast’s parent corporation Advance Magazine Publishers, and OpenAI’s CEO Sam Altman, who was part of Reddit’s board from 2015 to 2022. Reddit has cautioned in its filing that Redditors partaking in its IPO could lead to “increased volatility in the market price” of the company’s Class A common stock.
Other firms that have gone public and permitted select community members and others to participate in their IPOs through similar directed share programs include Doximity, Rivian, and Airbnb.
