According to reports from Reuters, Reddit, the San Francisco-based social media platform, is poised to achieve a valuation of $6.5 billion with its upcoming initial public offering (IPO). Sources, who chose to remain unnamed, indicated that the IPO is currently experiencing between four and five times oversubscription.
This valuation represents a notable decrease from Reddit’s previous fundraising round in August 2021, where it reached a valuation of $10 billion. The planned IPO price range is estimated to be between $31 and $34 per share.
Reddit, known for its diverse user base and communities, has disclosed its holdings in cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and Polygon (MATIC) in its IPO filing. The company intends to trade under the ticker symbol RDDT on the New York Stock Exchange.
Despite its popularity, Reddit has yet to turn a profit. In the last quarter of 2023, the company reported net income of approximately $18.5 million. However, it concluded the year with a net loss of $90.8 million.
In its IPO, Reddit aims to raise $748 million by offering more than 15.2 million shares of its Class A common stock, supplemented by an additional 6.7 million shares from selling stockholders. Notably, Reddit is allowing some employees to sell shares during the IPO, deviating from the conventional lock-up period practice to prevent immediate selling that could adversely affect stock prices.
Moreover, Reddit plans to reserve shares for high-impact users with positive “karma,” reflecting the platform’s commitment to its community.
Originally acquired by media company Condé Nast in 2006, Reddit is now headed by co-founder and CEO Steve Huffman, who retains a 3.3% ownership stake. His fellow co-founder, Alexis Ohanian, departed from the company in 2020.
Major shareholders in Reddit include Advance Publications, the parent company of Condé Nast (holding 30.1%), as well as Tencent, a Chinese conglomerate (11%), and Sam Altman, CEO of OpenAI (8.7%).
The decision to target a lower valuation comes amidst a subdued IPO market in 2024. Despite this, Reddit’s IPO demonstrates strong demand, aligning with the recent uptick in IPO activity in the U.S. stock market compared to the previous year. However, global IPO figures for 2023 indicate a decline, marking the lowest number since 2019.
