Social media platform Reddit has drawn up detailed plans for an IPO launch date and price, moving forward with a listing it has been eyeing for more than three years, according to people familiar with the matter. Reddit is planning to offer stocks in its IPO to 75,000 of its biggest users when it hits the market next month as per people familiar with the matter.
The Reddit IPO launch is aimed at building loyalty, but could backfire if the stock falls in its debut. Reddit CEO Steve Huffman said, “I want our users to be shareholders, and I want our shareholders to be users,”.
Reddit IPO valuation
The Reddit was valued at $10 billion in a private fundraising round in August 2021. When it first decided to list, it was aiming for a valuation of more than $15 billion but whether that will hold or not is another matter. A lot of IPO valuations have dropped significantly over the last two years given market conditions, so it’s likely Reddit’s valuation will be revised prior to IPO.
Reddit IPO in 2024
It would be the first IPO of a major social media company since Pinterest’s (PINS.N), debut in 2019, and would come as Reddit and its peers face stiff competition for advertising dollars from the likes of TikTok and Facebook (META.O),
The Reddit IPO would also test the willingness of some its users to back the company’s stock market debut.
Reddit, which filed confidentially for its IPO in December 2021, is planning to make its public filing in late February, launch its roadshow in early March, and complete the IPO by the end of March, two of the sources said.
Reddit IPO price and date
The San Francisco-based company, which was valued at about $10 billion in a funding round in 2021, is seeking to sell about 10% of its shares in the IPO, the sources added. It will decide on what IPO valuation it will pursue closer to the time of the listing, along with the price according to the sources.
The sources cautioned that Reddit’s IPO plans could be pushed back, as has happened in the past, and asked not to be identified discussing confidential deliberations.
What is Reddit?
Founded in 2005 by web developer Steve Huffman and entrepreneur Alexis Ohanian, Reddit became best known for its niche discussion groups and its users voting “up” or “down” on the content posted by other members.
The company, which generates its revenue primarily through advertising and also offers premium access for $5.99 per month, has yet to turn a profit, Huffman said in a Reddit post last June.
In the past, the company has attributed its losses to investing in the platform and its users engaging less with advertising on its site than other social media.
Should you buy into Reddit IPO?
The company held back from pulling the IPO trigger until it came closer to profitability. Bouts of market volatility that shut down the IPO market for much of the last two years also contributed to it delaying its plans.
Reddit expected to generate slightly over $800 million in advertising revenue in 2023, up more than 20% from a year earlier, The Information reported last month.
The company said last year it would charge companies for access to its application programming interface (API), which is used by technology companies to train large-language models used in artificial intelligence.
Large social media stocks have rebounded over the past year, driven mainly by a rally in technology stocks as interest rates peaked.
Shares of Meta Platforms, which operates Facebook, have more than trebled in value over the past 12 months, while Snap’s (SNAP.N), opens new tab shares rose 60% over the same period.
Reddit IPO issue price
The users will have the opportunity to buy the Reddit stock at its issue price an unusual move that is normally preserved for big institutional investors, the people said. That investor base is deemed safer as it generally holds the stock for a longer period than retail investors, who are expected to be more likely to sell on weakness.
Reddit filed confidentially for an IPO in late 2021 and is expected to make its documents public later this month and seek to list on the New York Stock Exchange in March. Reddit achieved a valuation of $10 billion in a fundraising round in August 2021, but valuations have shifted since then.
Is Reddit IPO worth the wait?
Reddit is one of the more prominent deals expected this year amid hopes for a revival of the IPO market, which has languished for the last two years.
Reddit IPO ticker
The Reddit IPO tickler will be announced closer to the launch date in March.
