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Reddit, the social media giant known for its diverse forums covering everything from mainstream news to niche hobbies, is gearing up for an IPO with a target valuation of around $6.5 billion. The company and its existing stakeholders plan to sell approximately 22 million shares at a price range of $31 to $34 per share.
In its filing released on Monday, Reddit revealed that it has set aside about 1.76 million shares for eligible users and moderators, known as Redditors, who created their accounts before January 1. These Redditors will be able to purchase and sell these shares without being subjected to the usual lock-up period that restricts selling for six months after the IPO.
Reddit filed its prospectus in February and aims to go public on the New York Stock Exchange under the ticker symbol “RDDT.” Out of the 22 million shares issued in the offering, approximately 15.3 million will be sold by Reddit, potentially raising $520 million at the top end of the range. Existing stakeholders, including CEO Steve Huffman, plan to sell a combined 6.7 million shares.
Investors are keeping a close eye on Reddit’s IPO, which is not only the first major tech debut of the year but also the first social media IPO since Pinterest in 2019. In 2021, Reddit filed a confidential draft of its public offering prospectus with the SEC and raised $1.3 billion in a funding round, reaching a private market valuation of $10 billion.
According to the company’s S-1 filing, Reddit reported annual sales of $804 million in 2023, marking a 20% year-over-year increase from $666.7 million in 2022. Despite this growth, the company recorded a net loss of $90.8 million for 2023, an improvement from the $158.6 million net loss in the previous year.
Prominent shareholders in Reddit include Tencent, Condé Nast’s parent company Advance Magazine Publishers, and former Reddit board member and OpenAI CEO Sam Altman.
The company, in its filing, warned that Redditors participating in the IPO could contribute to increased volatility in the market price of Reddit’s Class A common stock. Similar directed share programs have been implemented by other companies like Doximity, Rivian, and Airbnb.
