By
Tolu Ajiboye
March 22nd, 2024
Reddit has confirmed its RDDT shares will trade at $34 at the IPO as the company hopes to raise $748 million from 22,000,000 shares.
Social news aggregation and forum website Reddit has announced a share price point for its initial public offering (IPO). Reddit had initially planned a range of between $31 and $34 and has now decided on the range’s highest point.
Reddit IPO Plan
An official press release states that the IPO will offer 22 million Class A common stock. Reddit will sell 15,276,527 shares, while other stockholders will sell 6,723,473 shares. According to the press release, the underwriters may buy additional shares, up to a 3,300,000 maximum, at the IPO price.
Publishing company Advance Magazine Publishers is the largest Reddit shareholder, with Chinese multinational giant Tencent as the second-largest. Both companies have a 30.1% and 11% stake, respectively.
A Guardian report states that Reddit plans to allow the platform’s most active users access to the IPO. The plan will involve a tiered system that will prioritize people who “meaningfully contributed to Reddit community programs,” and users with a minimum “karma” score, which describes user points given to others for posting. The plan will also reward users who have completed a specified amount of moderator actions.
Trading is to begin today on the New York Stock Exchange (NYSE) under the “RDDT” ticker symbol. The offering will then close on Monday, March 25. Reddit is hoping to raise $748 million from the 22 million shares.
These figures put Reddit’s valuation at $6.4 billion. The target seems likely, considering a Reuters report which specified that the IPO was already four to five times oversubscribed as of last week. Nonetheless, the oversubscription does not indicate market performance in any way.
Company Valuation Lower Than Initial Price Point
Interestingly, the new valuation is at least 35% lower than the $10 billion figure set in 2021 from a private market valuation. At the time, the tech market was experiencing a notable boom that pushed valuations high. Unfortunately, the year after was characterized by high-interest rates from increased inflation. This modified investor behavior, forcing them to change their portfolios and reject seemingly risky assets. Ultimately, companies began to downsize and reduce their valuations.
Reddit’s IPO is the first one conducted by a major social media platform since Pinterest went public in 2019. It comes after multiple unsuccessful attempts over the last few years. Reddit initially filed for an IPO back in December 2021 and was set to begin trading the following March.
Interestingly, Reddit has not been the most successful company. Since it debuted in 2005, the social media company has had a net loss every year. Last year, Reddit lost $90.8 million, a better figure than the $158.6 million lost in 2022. However, the number of weekly average users has hit 267.5 million, making Reddit one of the world’s biggest social media networks. According to an IPO filing, Reddit has more than 1 billion total posts and over 100,000 active communities.