Reddit Prices Its IPO at $34 Per Share, Valuing It At $6.4 Billion

Reddit, the popular social media platform known for its diverse communities and user-generated content, has priced its highly anticipated initial public offering (IPO) at $34 per share. This pricing places the company’s valuation at an impressive $6.4 billion.

The Offering Details

• Share Price: Reddit seeks to sell 22 million shares to investors.
• Stock Exchange Debut: The company’s shares will begin trading on the New York Stock Exchange (NYSE) under the ticker symbol RDDT.

A Long-Awaited Milestone

The public market has closely watched Reddit’s journey. The company initially filed for a public listing in 2021, aiming for a lofty market capitalization of $15 billion. However, changing market dynamics and a cooling tech IPO environment prompted Reddit to reevaluate its expectations.

Investor Interest and Oversubscription

The IPO offering was met with strong demand. Sources familiar with the deal reported that it was four to five times oversubscribed. As a result, Reddit is poised to comfortably raise its targeted $748 million from the public market.

Financial Snapshot

• In its most recent filing with the Securities and Exchange Commission (SEC), Reddit disclosed several key points:
  • 2023 Revenue: $804 million (up 21% over the year).
  • Profitability: Despite its nearly 20-year history, Reddit has yet to book a profit.
  • Strategic Investments: The company highlighted investments in cryptocurrency and noted that OpenAI CEO Sam Altman is an investor, holding 9.2% of the voting rights as of February 22.
  • Data-Sharing Deal: Reddit recently signed a data-sharing agreement valued at $60 million per year with Alphabet’s Google.

Challenges Ahead

While Reddit’s IPO marks a significant milestone, challenges remain:

• FTC Investigation: The company disclosed an ongoing investigation by the Federal Trade Commission (FTC).
• Patent Dispute: A patent dispute with Nokia Corp has also ensnared Reddit.
• Path to Profitability: Investors hope that leveraging the platform’s vast data can lead to profitability, especially as the company explores generative artificial intelligence models.

As Reddit makes its stock market debut, all eyes are on how the platform will navigate these challenges and continue to evolve in the ever-changing landscape of social media.