In a move that has garnered significant attention from investors and tech enthusiasts alike, Reddit is gearing up for its highly anticipated initial public offering (IPO) with a valuation target of up to $6.5 billion. This valuation represents a significant decrease from its previous peak, reflecting changing investor sentiment towards unprofitable companies.
According to sources familiar with the matter, Reddit is eyeing a price range of $31 to $34 per share. At this range, the company’s equity value would fall within the $6 billion to $6.5 billion range on a fully diluted basis. This valuation is notably lower than the $10 billion valuation Reddit achieved in its last fundraising round in August 2021, signaling a shift in investor appetite.
Despite the decrease in valuation, Reddit remains a highly anticipated IPO, with investors closely watching its unique approach to going public. One of the standout features of Reddit’s IPO is its plan to offer shares to individual investors and loyal users of its message boards, a departure from the traditional model where shares are primarily sold to institutional investors during an IPO.
Additionally, Reddit intends to permit certain employees to sell shares in the IPO, a move that deviates from the typical practice of imposing lock-up periods on employee shares to prevent downward pressure on stock prices post-IPO. However, Reddit will still enforce a lock-up period for shares not sold during the IPO.
The company’s decision to involve individual investors and loyal users in its IPO reflects its commitment to community engagement and democratizing access to ownership. By offering shares to its most dedicated users, Reddit aims to foster a sense of ownership and loyalty among its community members.
As Reddit prepares for its roadshow to pitch investors and eventual listing, all eyes will be on the company’s performance and reception in the public market. With its unique approach and loyal user base, Reddit’s IPO is poised to be a significant event in the tech and investment landscape, shaping the future of social media and online communities.
