Social media giant Reddit is setting its sights on a valuation of up to $6.4 billion in its upcoming initial public offering (IPO). Last month, the company announced to go public, under the ticker symbol “RDDT”, on the New York Stock Exchange as soon as March.
The San Francisco-headquartered company along with some of its existing shareholders plans to sell a total of 22 million shares at a range of $31 to $34 per share. Of the 22 million, Reddit aims to sell 15.3 million shares and selling shareholders, including the company’s chief executive officer Steve Huffman, plans to sell 6.7 million shares.
Meanwhile, in a unique move aimed at engaging its loyal user base, the company is reserving 8% of its IPO shares, up to 1.76 million shares, for eligible users and moderators, certain board members and friends and family members of certain employees and directors. Unlike typical IPO lock-up periods, these participants can sell their shares immediately.
In addition to perhaps becoming the first major social media platform to go public since Pinterest in 2019, the public debut is an important first for the company as it positions Reddit to become the largest tech IPO of 2024 (to date). Reddit’s journey to the IPO marks a significant milestone nearly two decades after its founding. While the targeted valuation is significant, it falls short of the $10 billion Reddit secured in a 2021 fundraising round. This may reflect the current market climate and its own financial status
While the targeted valuation of up to $6.4 billion is significant, it falls short of the $10 billion Reddit secured in a 2021 fundraising round. This may reflect the current market climate and Reddit’s own financial status, as the company remains unprofitable despite boasting over 73 million daily active users.
In terms of financials, Reddit reported a net loss of $90.8 million for the fiscal year that ended December 31, 2023, according to its IPO filing. Despite this, the company showcased a 21% revenue growth, climbing to $804 million in 2023 up from $666.7 million in the previous year.
Regardless the final valuation, Reddit’s IPO is poised to be a major event and will be closely watched by investors and the tech industry as a whole. However, as a public company, Reddit will likely face increased scrutiny regarding its platform and content policies. This, in turn, calls for the need to address challenges like content moderation and online harassment on the platform, along with diversification its revenue streams.
