Reddit prices IPO at $34 per share to raise $748M
In a significant boost to the crippling Initial Public Offering (IPO) market in the technology sector, social media giant Reddit set its IPO at the peak of its projected range of $31 to $34 per share. This strategic move generated an impressive $748 million. The firm and its current shareholders offloaded 22 million shares at $34 apiece, leading to an estimated valuation of around $6.4 billion for Reddit.
Reddit's IPO exceeds subscription targets, valuation predictions adjusted
Reddit's initial public offering exceeded subscription expectations by four to five times, suggesting a high probability of reaching its aimed-for $6.5 billion valuation. However, the company has tempered its valuation predictions after being appraised at $10 billion in a private fundraising round in 2021. While oversubscription doesn't necessarily ensure a strong stock market debut, it hints that Reddit could hit its targeted price range.
Reddit courts retail investors, sets aside 8% shares
In a bid to involve retail investors, Reddit earmarked 8% of the total stock up for grabs for eligible exclusive users and moderators on its platform. This allocation also includes certain board members, close acquaintances, and relatives of its employees and directors. The company's decision showcases a strategic plan to leverage its dedicated user base during this IPO. Despite its popularity, Reddit has never made a profit.
Reddit's devoted user base and content moderation hurdles
Despite the financial hurdles, Reddit prides itself on a devoted user base with an average of 73.1 million daily active users in the three months ending December 31, 2023. The platform is renowned for catering to niche topics and adopting a somewhat relaxed stance toward content moderation—an issue that has raised eyebrows among some advertisers. Reddit depends on volunteer moderators from its user base to oversee content across its forums, underscoring the platform's unique operational approach.
