Reddit Inc. and its investors are gearing up for one of the year’s largest initial public offerings (IPOs), seeking to raise as much as $748 million. The social media platform plans to sell 22 million shares at a price range of $31 to $34 per share, with a valuation target of up to $6.5 billion.
The IPO includes a unique aspect, as Reddit is setting aside about 1.76 million shares for purchase by users and moderators who created accounts before January 1. These shares will not be subject to a lockup period, allowing the owners to sell them on the opening day of trading.
Founded in 2005, Reddit has grown to an average of 73.1 million daily active unique visitors in the fourth quarter of 2023. Despite its popularity, the company reported a net loss of $91 million on revenue of $804 million in 2023, an improvement from a net loss of about $159 million on revenue of $667 million a year earlier.
Reddit’s largest shareholder is Advance Magazine Publishers Inc., which bought Reddit in 2006 and spun it out in 2011. The company’s IPO is being led by Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co., and Bank of America Corp., with plans for its shares to trade on the New York Stock Exchange under the symbol RDDT.
CEO Steven Huffman highlighted Reddit’s growth opportunities, particularly in advertising, where the platform is attracting advertisers looking to reach high-intent customers. Additionally, Reddit is exploring data licensing arrangements, allowing third parties to access its data for training artificial intelligence models.
The IPO will be closely watched by investors and market observers, particularly after a series of lackluster IPOs in the US market. Reddit’s listing comes amid a rebound in IPO activity, with the company poised to join the ranks of newly and soon-to-be public companies in 2024.
