Reddit, the social media platform renowned for its diverse array of web forums covering topics ranging from the mainstream to the exceedingly niche, is gearing up for its initial public offering (IPO), aiming to raise up to $748 million with a valuation nearing $6.5 billion.
According to filings released on Monday, the company plans to offer approximately 22 million shares at a price range of $31 to $34 per share. This valuation takes into account a fully diluted share count, encompassing not only the shares immediately available but also those potentially available in the future.
In a notable move, Reddit has allocated around 1.76 million shares for specific users and moderators, affectionately referred to as Redditors, who established their user accounts prior to January 1 and wish to partake in the IPO.
These Redditors will have the opportunity to purchase these shares and trade them upon Reddit’s public debut, as they will not be bound by the typical lock-up period, which typically restricts investors from selling shares for six months following the IPO.
Reddit submitted its prospectus in February, intending to list on the New York Stock Exchange under the ticker symbol “RDDT.”
The investment community is eagerly observing Reddit’s IPO, as it marks the first significant tech debut of the year and the first social media IPO since Pinterest’s public offering in 2019.
In 2021, Reddit submitted a confidential draft of its IPO prospectus to the SEC. During the same period, the company secured $1.3 billion in a funding round, with a private market valuation of $10 billion, according to PitchBook.
Reddit’s annual revenue for 2023 amounted to $804 million, representing a 20% year-over-year increase from $666.7 million in 2022, as disclosed in the company’s S-1 filing.
Additionally, it reported a net loss of $90.8 million for 2023, a reduction from the $158.6 million net loss recorded in the previous year.
Among the noteworthy shareholders of Reddit are Tencent, Advance Magazine Publishers (the parent company of Condé Nast), and Sam Altman, CEO of OpenAI, who served on Reddit’s board of directors from 2015 to 2022.
The company cautioned in its filing that the participation of Redditors in its IPO “could result in increased volatility in the market price” of its Class A common stock.
Other companies that have pursued similar directed share programs, allowing certain community members and others to participate in their IPOs, include Doximity, Rivian, and Airbnb.
