Reddit is gearing up for its upcoming initial public offering (IPO), with a targeted valuation close to $6.5 billion, as disclosed in a corporate filing on Monday. The social media platform, renowned for hosting diverse web forums, plans to sell approximately 22 million shares within the price range of $31 to $34 per share. This move aims to raise about $750 million, making it a closely watched event for investors.
The IPO is expected to mark the first major tech debut of the year and the first social media initial public offering since Pinterest went public in 2019. The company’s filing also reveals that a portion of the shares, around 1.76 million, is reserved for certain users and moderators, known as Redditors, who created their accounts before January 1. These users can purchase and freely trade these shares without being subject to the typical lock-up period.
In its prospectus filed in February, Reddit announced its intention to go public on the New York Stock Exchange under the ticker symbol “RDDT.” Of the 22 million shares offered, Reddit plans to sell about 15.3 million, potentially raising $520 million at the top of the price range. Existing stakeholders, including CEO Steve Huffman, are set to sell a combined 6.7 million shares.
In 2021, Reddit filed a confidential draft of its public offering prospectus with the SEC and raised $1.3 billion in a funding round, achieving a private market valuation of $10 billion. The company’s S-1 filing indicates annual sales of $804 million in 2023, marking a 20% year-over-year increase from $666.7 million in 2022. Despite a net loss of $90.8 million for 2023, this figure represents a notable improvement from the $158.6 million net loss in the previous year.
Noteworthy shareholders in Reddit include Tencent, Condé Nast’s parent company Advance Magazine Publishers, and former Reddit board member Sam Altman, who is also the CEO of OpenAI. The company acknowledges in its filing that Redditors participating in the IPO could potentially lead to increased market volatility for its Class A common stock. This strategy aligns with other companies like Doximity, Rivian, and Airbnb, which have allowed community members to participate in IPOs through directed share programs.
MOST KEY POINTS
- IPO Valuation Target: Reddit aims for a valuation nearing $6.5 billion in its upcoming IPO, positioning itself as a significant player in the tech market.
- Share Offering Details: The company, along with existing stakeholders, plans to sell approximately 22 million shares at a price range of $31 to $34 per share, expecting to raise around $750 million.
- Market Debut Significance: Reddit’s IPO is anticipated to be the first major tech debut of the year and the initial social media IPO since Pinterest in 2019, garnering attention from investors.
- Redditor Participation: About 1.76 million shares are allocated for Redditors, allowing users and moderators to actively engage in the IPO without the typical post-offering lock-up period.
- Ticker Symbol and Exchange: Reddit intends to go public on the New York Stock Exchange under the ticker symbol “RDDT,” adding an additional layer of significance to its market entry.
- Stakeholder Breakdown: Of the 22 million shares offered, Reddit plans to sell approximately 15.3 million, potentially raising $520 million, while existing stakeholders, including CEO Steve Huffman, aim to sell a combined 6.7 million shares.
- Fundraising History: In 2021, Reddit filed a confidential draft of its public offering prospectus with the SEC, raising $1.3 billion in a funding round, and achieving a private market valuation of $10 billion.
- Financial Performance: Reddit’s S-1 filing reveals annual sales of $804 million in 2023, marking a notable 20% year-over-year increase, accompanied by a reduced net loss of $90.8 million compared to the previous year.
- Notable Shareholders: Tencent, Condé Nast’s parent company Advance Magazine Publishers, and former Reddit board member Sam Altman, CEO of OpenAI, are among the company’s noteworthy stakeholders.
- Market Volatility Warning: Reddit’s filing cautions that Redditor participation in the IPO may result in increased market volatility for the company’s Class A common stock, aligning with strategies observed in IPOs of companies like Doximity, Rivian, and Airbnb.