Reddit, the influential social media giant renowned for its diverse forums, is stepping into the spotlight with its anticipated initial public offering (IPO), aiming to raise a substantial sum of $750 million.
With plans to offer around 22 million shares at a price bracket of $31 to $34 per share, Reddit is eyeing a valuation nearing $6.5 billion. What sets Reddit’s IPO apart is its inclusive approach, allocating 8% of the shares, amounting to 1.76 million, to its active participants and moderators, affectionately known as Redditors.
This unique move allows users to partake in the offering, requiring them to complete applications, establish a brokerage account with a partnering bank, and fund their stock acquisition by March 18. The deadline for Redditors to secure their shares is March 21 at 7 a.m., with the company anticipating the commencement of stock trading on the same day.
Reddit has collaborated with renowned underwriters like Morgan Stanley, Goldman Sachs, and J.P. Morgan to facilitate the stock procurement process. The decision to go public stems from Reddit’s strategic goals to bolster operations and explore avenues for expansion.
The company’s 2023 financial report revealed revenue of $804 million, marking a 20% surge from the previous year, coupled with a reduced net loss of $90.8 million compared to 2022. Reddit’s user-centric IPO approach underscores its community-driven ethos, although it introduces potential market risks, including heightened price volatility due to increased participation of individual retail investors, who might opt for swift share sell-offs.
The investment community and industry experts are closely monitoring Reddit’s IPO, considering it the foremost significant tech debut of the year and the initial social media IPO since Pinterest’s public offering in 2019. The outcome of this IPO is poised to serve as a litmus test for the broader IPO landscape, which has been relatively subdued, shedding light on investor sentiment towards shares in tech companies yet to turn profitable.