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Reddit Revs Up for IPO

Tuesday, March 26, 2024

Primary Blog/Stock Market/Reddit Revs Up for IPO
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 The Wealth Effect

Sector Spotlight:
​Reddit Revs Up For IPO

Reddit and its current stakeholders are gearing up to offload roughly 22 million shares, priced between $31 and $34, as revealed in a recent filing. Targeted valuation: nearly $6.5 Billion in it's upcoming IPO. The anticipated valuation includes all outstanding shares, not just the immediate ones.

Moreover, Reddit has earmarked about 1.76 million shares for Redditors—specific users and moderators—who wish to partake in the IPO and had accounts set up before January 1. These Redditors can acquire and trade these shares freely without any post-IPO lock-up period, a standard limitation on share sales for six months after the offering.

The company's prospectus, unveiled in February, signaled its intent to debut on the NYSE under the symbol "RDDT." Of the total 22 million shares in the IPO, Reddit intends to sell approximately 15.3 million, potentially netting $520 million at the higher valuation. Meanwhile, CEO Steve Huffman and other stakeholders plan to sell a combined 6.7 million shares.

Market observers are closely tracking Reddit's IPO, which not only marks the year's premier tech launch but also the social media sector's first IPO since Pinterest's 2019 debut.

In 2021, Reddit confidentially filed its IPO prospectus with the SEC, subsequently raising $1.3 billion and achieving a $10 billion private market valuation. The company's 2023 revenue hit $804 million, up 20% from the previous year, but with a reduced net loss of $90.8 million compared to $158.6 million in the prior year.

Key shareholders in Reddit include Tencent, Condé Nast's parent company Advance Magazine Publishers, and former OpenAI CEO Sam Altman. Reddit cautioned in its filing that Redditors' involvement in the IPO could heighten stock price volatility, a risk seen in similar programs by other companies like Doximity, Rivian, and Airbnb.

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