Reddit, known for its vast range of web forums covering diverse topics, is preparing for its initial public offering (IPO) with aims to raise up to $748 million, valuing the company at nearly $6.5 billion.
The company plans to offer approximately 22 million shares at a price range of $31 to $34 per share, as per filings released on Monday. This valuation accounts for a fully diluted share count, including both currently available shares and potential future ones.
In a unique move, Reddit has set aside around 1.76 million shares for specific users and moderators, known as Redditors, who created their accounts before January 1 and wish to participate in the IPO. These Redditors will be able to purchase and trade these shares upon Reddit’s public debut, bypassing the typical lock-up period that restricts investors from selling shares for six months post-IPO.
The company submitted its prospectus in February, aiming to list on the New York Stock Exchange under the ticker symbol “RDDT.” The investment community is closely watching Reddit’s IPO, as it represents the first significant tech debut of the year and the first social media IPO since Pinterest’s public offering in 2019.
In 2021, Reddit submitted a confidential draft of its IPO prospectus to the SEC. During the same period, the company raised $1.3 billion in a funding round, achieving a private market valuation of $10 billion, according to PitchBook.
Reddit’s annual revenue for 2023 reached $804 million, marking a 20% year-over-year increase from $666.7 million in 2022, according to the company’s S-1 filing.
Furthermore, Reddit reported a net loss of $90.8 million for 2023, a decrease from the $158.6 million net loss recorded in the previous year.
Notable shareholders of Reddit include Tencent, Advance Magazine Publishers (parent company of Condé Nast), and Sam Altman, CEO of OpenAI, who served on Reddit’s board of directors from 2015 to 2022.
The company cautioned in its filing that the participation of Redditors in its IPO “could result in increased volatility in the market price” of its Class A common stock.
Similar directed share programs have been pursued by other companies, including Doximity, Rivian, and Airbnb, allowing certain community members and others to participate in their IPOs.