Recently, Reddit Inc. has disclosed its intentions to launch one of the year’s most significant initial public offerings (IPOs), with aspirations to raise a substantial USD 748 million. According to a regulatory filing made public on Monday 11th March 2024, the company, alongside existing shareholders, is preparing to offer 22 million shares at a price range of USD 31 to USD 34 per share.
Valuation of Reddit to surge to USD 5.4 billion
Reddit would attain a market value of USD 5.4 billion, marking a milestone for the Social Media platform renowned for its role in the 2021 meme stock frenzy, with the remaining portion to be sold by investors, primarily Reddit employees.
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Interestingly, a notable aspect of Reddit’s IPO strategy is the allocation of 8% of the offering to its user base including moderators and select individuals, which could potentially see substantial retail interest, given Reddit’s vast and engaged community.
Big Daddy’s of Finance to spearhead the IPO Process
Morgan Stanley, Goldman Sachs, JP Morgan Chase and Bank of America will be the financial heavyweights spearheading the IPO Process. According to the media sources, Reddit targets to have its shares listed on the New York Stock Exchange under the symbol RDDT, with plans to price the offering on March 20th and commence trading the following day.
Reddit’s path to this IPO has been like a rollercoaster, mirroring the ups and downs of the market. When they first raised funds in 2021, everyone thought they were worth a whopping USD 10 billion! But now, as they gear up to go public, the estimate has dropped to around USD 5 billion. It just shows how much the IPO world can change in a short time.
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The company was founded in 2005 and boasts an average of 73.1 million daily active unique visitors, yet faces challenges stemming from its user base’s volatility. Despite its influence, Reddit acknowledges the risks associated with its community’s vocal nature, often expressing discontent with platform decisions.
Moreover, the CEO of Reddit Steven Huffman remains optimistic about the company’s prospects emphasizing advertising as a primary revenue stream. Furthermore, Reddit explores avenues for growth through AI licensing agreements, signalling its commitment to diversification and innovation.
With key stakeholders, including Huffman and major investors, expected to retain significant control post-IPO, Reddit’s listing promises to be closely watched by investors and industry observers alike, marking a significant milestone in the platform’s trajectory.
