Reddit Reveals IPO Pricing Plans, Offering Shares Between $31 and $34 Each

In a highly anticipated move, Reddit unveiled its pricing strategy for its upcoming initial public offering (IPO), setting the stage for its entry into the stock market. The social media platform expects to price its shares between $31 and $34 each, making it the first major social media company to go public in years.

The announcement provides potential investors, including Reddit users themselves, with crucial details to assess their interest in purchasing stock in the IPO. With an unusual structure that allows more retail investors to participate, Reddit plans to offer 22 million shares of its Class A stock, potentially raising up to $748 million from the offering.

If shares are priced at the midpoint of the expected range, Reddit anticipates earning approximately $450 million in proceeds from the IPO. These funds will be allocated towards general purposes, including operating expenses, and potential investments in new technologies or intellectual property.

Despite initially targeting a $10 billion valuation in its last funding round in 2021, Reddit now seeks a valuation of $6.4 billion with its IPO. This valuation, while lower than previous expectations, could still serve as a barometer for the broader IPO market, which has experienced a downturn in recent times.

Reddit’s financials reveal a mixed picture, with a reported net loss of $90.8 million in 2023. However, the company’s revenue saw a 21% year-over-year increase in the same period, signaling potential growth opportunities. Additionally, Reddit boasts over 73 million daily active users as of the final quarter of 2023, reflecting its significant reach and engagement.

In a unique move, Reddit is reserving 8% of its IPO shares, or 1.76 million shares, for its most dedicated users, allowing them the opportunity to become shareholders. This gesture underscores Reddit’s commitment to its community and could potentially impact stock volatility, as retail investors may exhibit different investment behaviors compared to institutional investors.

As Reddit prepares for its IPO, all eyes are on the platform to see how its public debut unfolds and its implications for the broader market, particularly in the realm of social media and tech IPOs.