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Reddit is targeting a price range of $31 to $34 per share, which could translate to a valuation of up to $6.5 billion.
Reddit, one of the most popular social media platforms in the United States, is gearing up for its highly anticipated IPO on the New York Stock Exchange. The company’s roadshow will start next week, specifically on March 11, 2024.
According to a Financial Times report citing people familiar with the matter, Reddit plans to price its initial public offering on March 20, 2024, once the roadshow is concluded. After that, trading will follow the next day under the ticker symbol RDDT.
Reddit Looking to Attract Anchors for Its IPO
Currently, the company is reportedly looking to attract an anchor investor who will receive a large allocation of shares in exchange for having their name published in the prospectus. The firm is eyeing some of its largest existing shareholders, including Fidelity and China’s Tencent, to take up the role.
Reddit is targeting a price range of $31 to $34 per share, which could translate to a valuation of up to $6.5 billion. However, this valuation would be significantly lower than the $10 billion Valuation Reddit reached in its last private funding round in 2021.
Reddit officially submitted its S-1 form to the Securities and Exchange Commission (SEC) in February to declare its intentions for the IPO. The move comes after four years of stalling. The social media platform initially hinted at the possibility of going public in December 2021.
In the S-1 form, Reddit disclosed that it would allow some Redditors to participate in the IPO. However, the social media platform warned in its prospectus that trading in its shares could be volatile, given its status as the birthplace of “meme stocks” and the WallStreetBets trading forum.
The company said users could lose their investments as the stock “may be volatile and decline significantly after the listing regardless of its operating performance.”
Reddit Hit with $91 Million Loss in 2023
The filing with the SEC also revealed the company’s financial standing. Despite Reddit’s popularity and influence, the company has yet to turn a profit in its 19-year history. The firm recorded a $91 million loss in 2023 despite generating $800 million in sales primarily from advertising.
However, the firm plans to profit from its advertising business, which targets ads based on user interests and intent, similar to Pinterest.
In addition to advertising, Reddit is banking on licensing user data to AI companies as a lucrative revenue stream. The company has already struck a deal with Google worth approximately $60 million annually.
The company appointed Morgan Stanley and Goldman Sachs as the lead underwriters for the IPO, with over a dozen other banks participating in the sales.
