Reddit’s impending initial public offering (IPO) aims to achieve a $6.5 billion valuation, drawing substantial interest from investors, as reported by Reuters. Oversubscribed by four to five times, the IPO signals anticipation surrounding Reddit’s transition to a publicly traded entity. Despite a $10 billion valuation in its previous funding round, the current target represents a reduction. The IPO is priced between $31 and $34 per share, with Reddit choosing the New York Stock Exchange for listing under the ticker RDDT.
Based in San Francisco, Reddit has revealed holdings in Bitcoin (BTC), Ethereum (ETH), and Polygon (MATIC) in its IPO filing. This move towards public trading occurs amidst a less hospitable IPO market, yet the fervour for Reddit’s offering underscores investor confidence in its potential.
Financially, Reddit reported a net income of around $18.5 million for Q4 2023, but closed the year with a net loss of $90.8 million. Seeking to raise $748 million through the IPO, Reddit plans to offer over 15.2 million shares of Class A common stock, alongside 6.7 million shares from selling stockholders.
Unlike conventional approaches, Reddit will permit some employees to sell shares during the IPO, departing from lock-up periods typically enforced to stabilise stock prices. Additionally, shares will be reserved for prominent users with substantial “karma,” recognizing the community’s value.
Major shareholders include co-founder and CEO Steve Huffman (3.3%), Advance Publications (30.1%), Tencent (11%), and OpenAI CEO Sam Altman (8.7%). Despite a challenging IPO market, Reddit’s offering has garnered significant attention.
With 33 IPOs in 2024, marking a 10% increase over the same period in 2023, Reddit’s move to public trading reflects its growth amidst shifting digital landscapes. Strategic decisions, including share allocation and pricing, aim to leverage investor interest. As the IPO date approaches, market response will gauge Reddit’s position and future prospects in the public domain.