Reddit, the social media company known for hosting web forums on topics from the mainstream to the extremely obscure, is targeting a valuation of close to $6.5 billion in its upcoming IPO.
The company and existing shareholders plan to sell about 22 million shares at a range of $31 to $34 per share, according to a filing released Monday. The projected market cap reflects a fully diluted share count, not just the shares that will immediately be outstanding.
Reddit has also set aside roughly 1.76 million shares for certain users and moderators, known as Redditors, who want to participate in the IPO and have created their user accounts before Jan. 1. The Redditors will be able to purchase those shares and then sell them on the open market as they won’t be subject to a lock-up period, which typically prevents investors from selling shares for six months after the IPO.
Reddit filed its prospectus in February, and said it planned to go public on the New York Stock Exchange and trade under the ticker symbol “RDDT.” Of the 22 million shares being issued in the offering, Reddit is selling about 15.3 million, which would mean raising $520 million at the top of the range. Existing stakeholders, including CEO Steve Huffman, plan to sell a combined 6.7 million shares.
Investors are closely watching Reddit’s offering, which will be this year’s first major tech debut and the first social media IPO since Pinterest went public in 2019.
In 2021, Reddit filed a confidential draft of its public offering prospectus with the SEC. During that same year, Reddit raised $1.3 billion in a funding round and had a private market valuation of $10 billion, according to the deal-tracking service PitchBook.
Reddit’s annual sales in 2023 were $804 million, a 20% year-over-year increase from $666.7 million in 2022, according to the company’s S-1 filing. It also recorded a net loss of $90.8 million for 2023, which was narrower than the $158.6 million net loss it logged a year earlier.
Some of the company’s notable shareholders include Tencent, Condé Nast’s parent company Advance Magazine Publishers and OpenAI CEO Sam Altman, who was a member of Reddit’s board of directors from 2015 to 2022.
The company warned in its filing that Redditors who participate in its IPO “could result in increased volatility in the market price” of the company’s Class A common stock. Other companies that have gone public and allowed certain community members and others to participate in their IPOs via similar directed share programs, include Doximity, Rivian and Airbnb.
