Reddit IPO, the popular social media platform, is set to enter a new phase as a publicly traded company with a market value of $6.4 billion. This follows the announcement that its initial public offering (IPO) will price shares at $34 each.
The Reddit IPO, which is the largest by a social media company in years, is expected to raise $748 million with the sale of 22 million shares.
The decision to price shares at $34 per share came after Reddit’s investment bankers gauged investor demand for the stock. This move places Reddit in a strong position for its shares to start trading on the New York Stock Exchange under the ticker symbol RDDT.
Despite its recent valuation drop from $10 billion in 2021 during a private funding round, Reddit’s IPO was met with significant investor interest. The oversubscription of the IPO, reported to be four to five times oversubscribed, indicates positive investor sentiment and confidence in Reddit’s future prospects.
Advance Publications, the parent company of Condé Nast and owner of popular magazines like Vogue and Wired, is Reddit’s largest shareholder. The company has been experiencing net losses, including a $90.8 million loss in the previous year.
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However, Reddit’s substantial user base of approximately 267 million weekly average users and vast content library have made it one of the largest social networks and content platforms, attracting investor attention.
Reddit’s IPO filing revealed it has over 1 billion posts and more than 100,000 active subreddits. The platform has also been exploring new revenue opportunities, such as partnering with Google to allow the tech giant to train its AI models on Reddit users’ posts, leveraging its extensive user-generated data.
Leading up to the IPO, there were concerns that Reddit users might influence the stock price negatively. To involve its community, Reddit reserved a small portion of its IPO shares for its own users, including unpaid moderators who oversee subreddits. However, these shareholders are not obligated to hold onto their shares and can sell them immediately.
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Reddit CEO Steve Huffman’s efforts to increase revenue have at times faced backlash from users and moderators. Last year, thousands of subreddits protested against charging for access to the site’s API, impacting the platform’s culture temporarily.
Despite challenges, Reddit’s IPO marks a significant milestone for the company as it transitions into a publicly traded entity and navigates the expectations and opportunities of the stock market.
