Reddit is aiming for a valuation of up to $6.5 billion in its forthcoming IPO, as indicated by a knowledgeable individual. The company intends to set the price of its IPO between $31 to $34 per share, as stated by the source. The Wall Street Journal was the first to disclose the anticipated range and valuation.
In February, Reddit filed for its public debut and plans to be listed on the New York Stock Exchange under the ticker symbol RDDT.
During the offering, employees will have the opportunity to sell Reddit stock, the source added. According to PitchBook, Reddit had a private market valuation of $10 billion when it last secured a funding round of $1.3 billion in 2021.
At the upper end of the range, Sam Altman’s shares in the company would exceed $400 million in value. Altman, the CEO of OpenAI, spearheaded a $50 million funding round into Reddit in 2014.
He expressed in a blog post at the time that he had been a daily Reddit user for nine years and viewed the company as “an example of something that started out looking like a silly toy for wasting time and has become something very interesting.” Altman served on Reddit’s board from 2015 until 2022.
Other notable shareholders include Tencent and Advance Magazine Publishers, the parent company of publishing giant Condé Nast. Condé Nast acquired Reddit a year after tech entrepreneurs Alexis Ohanian and Steve Huffman founded the company, before spinning it out in 2011. In 2021, Reddit submitted a confidential draft of its public offering prospectus to the Securities and Exchange Commission.
According to its latest IPO prospectus, the company generated $804 million in annual revenue for 2023, marking a 20% year-over-year increase from $666.7 million. Its net loss decreased to $90.8 million for 2023 from $158.6 million the previous year.
Reddit’s non-employee forum moderators, referred to as Redditors, can participate in the upcoming IPO through the company’s “directed share program,” the filing stated. Similar programs, allowing community members or customers an opportunity to purchase shares at the IPO price, were offered by companies like Airbnb, Doximity, and Rivian.
Last summer, several prominent Reddit moderators restricted access to their communities, or subreddits, due to disagreements with the company’s plans concerning its application programming interface (API), which third-party developers use to build apps on the platform. The proposed change would have required some third-party developers to pay more to access Reddit’s API, based on their usage.
Reddit justified the API pricing changes, citing the usage of its data by tech companies training large language models similar to OpenAI’s GPT family of software.
The company is currently devising a data-licensing model to complement its core online advertising business, according to the filing. Google recently announced an expanded partnership with Reddit, granting it access to Reddit’s data.
Reddit’s debut on Wall Street coincides with a historically sluggish period for IPOs, partly due to concerns about interest rates and global economic uncertainty. Reddit’s IPO will mark the first significant tech offering of the year and the first social media IPO since Pinterest’s debut on Wall Street in 2019.
John Tuttle, the vice-chair of the New York Stock Exchange, expressed optimism about the IPO market in 2024 during an interview in January, stating, “We have a robust pipeline from across sectors and geographies.”
