Social media platform, Reddit, is aiming to raise up to $748 million in one of this year’s largest initial public offerings (IPOs). According to insiders, around 22 million shares will be sold at a price range between $31 to $34 each, evaluating the firm at approximately $6.5 billion.
The company’s journey to go public has spanned over two years, starting with the IPO filing in 2021 amidst record IPO volumes on U.S. exchanges amounting to $339 billion. In the same year, Reddit was valued at $10 billion, with estimations reaching $15 billion as per Bloomberg’s reports, should the company go public.
A key trait of its impending IPO is Reddit’s decision to allocate about 1.76 million shares for purchase by its users and moderators who created accounts before 1st January. There will be no lock-up period for these stocks, permitting their disposal on the first trading day.
Possibly both risky and advantageous is the active participation of Reddit’s community and moderators in the IPO. For instance, thousands of WallStreetBets forum members, with close to 15 million users, voted in favour of selling Reddit shares as soon as trading begins. Reasons for the sale varied from lack of profitability to concerns over competitiveness.
According to a February report, Reddit had a daily average of 73.1 million unique visitors in Q4 2023. It reported a net loss of $91 million on revenues of $804 million in 2023, versus a net loss of around $159 million on revenues of $667 million the previous year.
Advance Magazine Publishers, part of the Newhouse’s publishing empire which owns Conde Nast and acquired Reddit in 2006, is the company’s largest shareholder. Other significant shareholders include COO Jennifer Wong, FMR LLC, organisations associated with OpenAI’s Sam Altman, Tencent Holdings, Vy Capital, Quiet Capital, and Tacit Capital.
Reddit shares are scheduled for trading on the New York Stock Exchange (NYSE) under the ticker RDDT. The IPO is being led by Morgan Stanley, Goldman Sachs Group, JPMorgan Chase & Co. and Bank of America Corp.
In his IPO filing, Reddit’s co-founder and CEO, Steven Huffman, noted significant growth opportunities for the company, including advertising and licensing data for artificial intelligence model training. In January, the company signed data licensing agreements worth $203 million, valid from two to three years. The company anticipates a minimal revenue of $66.4 million this year from these contracts.
Thus, Reddit’s IPO not only stands out in the current share public offering market, but also underlines the company’s future strategic vision where user engagement and innovative approaches to monetisation and data usage play a key role.
