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In a move poised to reshape the landscape of social media, Reddit is gearing up for its highly anticipated initial public offering (IPO), targeting a valuation of up to $6.5 billion, according to sources familiar with the matter.
The company intends to price its IPO between $31 to $34 per share, marking a significant milestone in its journey towards public listing. The Wall Street Journal first reported on the expected valuation and pricing range, shedding light on Reddit’s ambitious plans to tap into the public market.
Reddit, known for its diverse and engaged user base, filed for its IPO in February and is set to trade on the New York Stock Exchange under the ticker symbol RDDT. The offering is poised to provide employees with an opportunity to sell Reddit stock, presenting a significant milestone for the company’s growth trajectory.
With a private market valuation of $10 billion following a funding round of $1.3 billion in 2021, Reddit’s IPO is poised to unlock substantial value for stakeholders, including notable shareholders such as Tencent and Advance Magazine Publishers, the parent company of publishing giant Condé Nast.
At the top end of the proposed price range, shares held by prominent figures like Sam Altman, CEO of OpenAI, could be valued at over $400 million, underscoring the significant wealth generation potential associated with Reddit’s public listing.
The company’s latest IPO prospectus revealed promising financial metrics, with Reddit reporting $804 million in annual revenue for 2023, representing a notable 20% year-over-year increase. Moreover, Reddit’s net loss narrowed to $90.8 million in 2023 from $158.6 million the previous year, signaling positive momentum in its financial performance.
Reddit’s IPO comes amidst ongoing developments within the social media landscape, with the company navigating challenges such as API-pricing changes and evolving data-licensing models. The company’s efforts to expand its advertising business and forge strategic partnerships, including an expanded collaboration with Google, underscore its commitment to driving growth and innovation in the digital space.
As Reddit prepares to make its Wall Street debut, market observers anticipate heightened investor interest in the company’s IPO, positioning it as the first major tech offering of the year and the first social media IPO since Pinterest’s debut in 2019.
John Tuttle, Vice-Chair of the New York Stock Exchange, expressed optimism about the IPO market’s prospects for 2024, citing a robust pipeline of offerings across sectors and geographies. Reddit’s IPO is expected to inject renewed energy into the market, setting the stage for further innovation and disruption in the social media landscape.