Reddit poised to make its stock market debut after IPO prices at $34 per share amid strong demand
SAN FRANCISCO– Reddit will enter a new era as a publicly traded company with a market value of $6.4 billion, after the social media platform’s initial public offering priced at $34 per share.
The price announced late Wednesday came at the high end of the target range set by Reddit’s investment bankers as they gauged investor demand for the stock in recent weeks. It sets the stage for trading in Reddit’s shares starting Thursday on the New York Stock Exchange under the ticker symbol “RDDT” in a debut that is likely to trigger a flood of commentary on Reddit’s own platform, as well as on rival social media.
The interest surrounding Reddit largely stems from a large audience that visits the service religiously to discuss a potpourri of topics ranging from silly memes to existential concerns, and to get recommendations from like-minded people.
However, by tech industry standards, Reddit remains extremely small for a company that has been around since 2005.
Meta Platforms – whose largest social media service Facebook was launched just 18 months before Reddit – has a market value of more than $1.2 trillion. Meta also generates annual revenue of $135 billion, while Reddit’s remains under $1 billion.
And then there’s this problem: Reddit never capitalized on its broad reach, racking up cumulative losses of $717 million. That number has increased due to cumulative losses of $467 million in December 2021, when the company first filed papers to go public before abandoning that attempt.
In the documents filed for the re-IPO, Reddit attributes the losses to a fairly recent focus on finding new ways to grow revenue.
But Reddit will now have more money in the bank to fund its ambitions to expand its influence and bring in more revenue in the process.
The IPO raised approximately $748 million, of which approximately $228 million went to Reddit shareholders who chose to sell some of their shares. Another $519 million is earmarked for Reddit, but the San Francisco-based company won’t receive all that money because it still has to pay commissions and other costs associated with the offering. Bankers still have a 30-day window to sell another 3.3 million shares, which would raise another $112 million before commissions and fees.
Reddit has reserved up to 1.76 million of the 15.3 million shares offered in the IPO for users of its platform. In typical IPO parlance, the remaining shares were bought primarily by mutual funds and other institutional investors, betting that Reddit is ready for prime time in the financial world.
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