Reddit Targets $6.5 Billion Valuation in Landmark IPO

tamir
Sat, 02 Mar 2024 14:01:41 +0000
IPO, Social Media, Alexis Ohanian, OpenAI, Reddit, Sam Altman, Steve Huffman, TenCent

Reddit, the renowned social media platform, is eyeing a valuation of up to $6.5 billion for its highly anticipated initial public offering (IPO), insiders reveal. Marking a significant milestone, the company has set its sights on listing on the New York Stock Exchange under the ticker RDDT, positioning itself as the premiere tech and social media IPO since Pinterest‘s entry to Wall Street in 2019.

The anticipated pricing range for Reddit‘s shares is pegged between $31 and $34, according to sources close to the matter, with The Wall Street Journal being the first to report these figures. This strategic move comes after Reddit confidentially submitted its IPO draft prospectus to the U.S. Securities and Exchange Commission (SEC) in early 2021, aiming to make a grand entrance into the public market.

Reddit‘s journey to this point has been marked by significant growth, with a private market valuation of $10 billion during its last funding round in 2021, where it raised $1.3 billion, as per PitchBook data. At the higher end of its IPO price range, Sam Altman, CEO of OpenAI and a major investor in Reddit, stands to see his stake in the company surge in value to over $400 million. Altman, who led a pivotal $50 million funding round in 2014, has been an avid supporter of Reddit, praising its evolution from a simple time-waster to a platform of substantial influence.

Noteworthy shareholders also include Tencent and Advance Magazine Publishers, the parent company of Condé Nast, which acquired Reddit a year after its foundation by tech entrepreneurs Alexis Ohanian and Steve Huffman, only to spin it off in 2011.

In the fiscal year 2023, Reddit reported an impressive $804 million in annual revenue, up 20% year-over-year from $666.7 million, showcasing a significant narrowing of its net loss to $90.8 million from $158.6 million the previous year.

In an unprecedented move, Reddit will allow its non-employee forum moderators, known affectionately as Redditors, to participate in the IPO via a “directed share program.” This initiative echoes the community-centric IPO approaches of companies like Airbnb, Doximity, and Rivian, further democratizing access to the company’s stock.

In conjunction with its primary online advertising revenue, Reddit is exploring a data-licensing model, having recently expanded its partnership with Google for enhanced data access.

Reddit‘s IPO emerges in a period of IPO market dormancy, attributed to rising interest rates and global economic uncertainties. Yet, as Reddit strides toward its public offering, it signals a potential rejuvenation of the tech IPO landscape, with NYSE vice-chair John Tuttle expressing optimism for a robust IPO pipeline in 2024, spanning various sectors and geographies.