As part of the planned IPO Reddit intends to sell approximately 10% of its shares. And it is a decision that will significantly influence the final IPO valuation.
Amidst preparations for its imminent initial public offering (IPO), Reddit is receiving advice from investors to set its sights on a valuation of no less than $5 billion.
According to a Bloomberg report on Sunday, sources close to the matter revealed that discussions have been underway between the social media platform and potential IPO investors, with advisers recommending the company aim for a valuation in the range of a mid-single-digit billion valuation.
Reddit’s IPO Scheduled for March
The suggestion for a $5 billion valuation comes amid a backdrop of private trades of Reddit’s unlisted shares, showcasing bids ranging from $4.5 billion to $4.8 billion. However, it’s essential to note that private trades often reflect a lower valuation than what a company might attain during an IPO, given the inherent illiquidity of unlisted shares.
The company initially filed confidentially in December 2021. The IPO, however, was postponed due to concerns over the company’s profitability at that time.
Most recently, Coinspeaker reported this January that the company plans to move forward with the IPO. The San Francisco-based firm will start its roadshow to court potential investors in early March, culminating the IPO process before the month ends.
The offering is scheduled for potential launch in late February or March. If Reddit proceeds with the IPO as projected, it could become the first social media company to do so since Pinterest in 2018.
Reddit to Sale 10% of Its Shares
As part of the planned IPO Reddit intends to sell approximately 10% of its shares, a decision that will significantly influence the final IPO valuation, according to reports.
Founded in 2005, Reddit’s prominence surged during the meme-stock era, particularly with the influential WallStreetBets subreddit shaping stock market dynamics. The intense trading frenzy of 2021, largely influenced by discussions on the platform, sent the prices of GameStop Corp. and AMC Entertainment Holdings Inc. into volatile swings.
Last year, the company launched its “Contributor Program,” where users can earn real money with their Reddit gold. Gold is a virtual currency used on the platform to reward, recognize, and celebrate Redditors for their contributions to the platform.
Under the Contributor Program, eligible Redditors, including moderators, have the opportunity to earn fiat money for the content they contribute on Reddit. The evaluation of their content will take into account the karma and gold they receive.