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Popular 19-year-old online forum platform Reddit priced its initial public offering (IPO) at $34 per share at the end of the range. This move comes at a time of increased investor interest; It’s the first major social media company to go public since Pinterest went public in 2019 and one of the few backmarket tech deals in recent years. The IPO raised $519 million and valued Reddit at approximately $6.5 billion. Reddit will hold its highly anticipated IPO on Thursday under the symbol “RDDT”.
The service includes 15.28 million shares sold by Reddit and an additional 6.72 million shares sold by existing shareholders. Despite its $10 billion private market cap in 2021, Reddit’s IPO price reflects a lower price tag hurt by economic conditions such as rising inflation and rising interest rates that have caused investors to prioritize the benefits of growth, ultimately leading to shrinkage. . Evaluation of new initiatives
The announcement that the share price of data center company Astera Labs increased by 72% on Wednesday is noteworthy, showing that investors are interested in companies related to intellectual property. But the tech IPO industry has long been in crisis; Only a few companies, including Instacart, Klaviyo and Arm Holdings, have gone public in the past two years.
Reddit’s main business is online advertising, which faces intense competition from large businesses such as Articles and Meta. Additionally, as noted in its report, the company’s competitors include Snap, X, Pinterest, Discord, Wikipedia and Amazon’s Twitch streaming service. Despite the competition, Reddit’s revenue rose 20% to $804 million in 2023 from $666.7 million last year. More importantly, its losses narrowed from $158.6 million in 2022 to $90.8 million in 2023, indicating an improvement in its financial performance.
The company has identified data licensing as a potential revenue stream and plans to generate approximately $66.4 million in revenue in 2024. Reddit recently expanded its partnership with Google, allowing the search giant to access Reddit data for AI training. intelligence and other purposes. But the move was investigated by the Federal Trade Commission, which sent a letter questioning Reddit’s data licensing practices.
As part of the IPO, Reddit announced a sharing plan that allows moderators to make choices and users, known as Redditors, to purchase items. This approach, previously adopted by companies such as Airbnb, Doximity and Rivian, is designed to reward users and customers and reflects Reddit’s commitment to contributing to the community in its development.