Reddit’s much-anticipated initial public offering (IPO) is attracting significant investor attention, reportedly being between four and five times oversubscribed. This heightened demand positions the social media platform to potentially achieve its targeted $6.5 billion valuation, signaling a robust market reception despite Reddit’s history of financial deficits.
The IPO, set to be priced in New York on Wednesday, seeks to raise up to $748 million, marking a crucial moment for Reddit as it transitions into a publicly traded company. While the oversubscription doesn’t guarantee a soaring stock market debut, it indicates Reddit’s potential to meet its price range of $31-34 per share.
Sources familiar with the matter revealed ongoing marketing efforts for the IPO, suggesting the heightened anticipation surrounding Reddit’s public listing. However, a Reddit spokesperson refrained from commenting on these developments due to confidentiality.
Established in 2005, Reddit has nurtured a dedicated user base, hosting diverse discussions across its 100,000 online forums or “subreddits.” Despite its popularity, the company has struggled to monetize its platform and achieve profitability, trailing behind industry giants like Meta Platforms’ Facebook and Twitter.
Reddit’s unique focus on niche topics and decentralized content moderation approach have been contentious issues, particularly for advertisers. CEO Steve Huffman has highlighted the platform’s vibrant and diverse communities, spanning from light-hearted memes to profound discussions on existential topics.
In 2021, Reddit gained widespread attention during the “meme-stock” frenzy when retail investors coordinated on the “wallstreetbets” subreddit to drive up prices of heavily shorted stocks, including GameStop.
To engage retail investors and foster community ownership, Reddit has allocated 8% of total shares for eligible users, moderators, board members, and select individuals associated with the company. This inclusive approach aligns with Reddit’s user-driven ethos and aims to strengthen its community connection during its IPO journey.
Despite financial losses, Reddit boasts impressive user engagement, with an average of 73.1 million daily active “uniques” in the final quarter of 2023, according to regulatory filings.
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