Reddit Targets $6.5B Valuation In IPO, Shares Priced At Attractive $31-$34

Reddit is gearing up for its initial public offering (IPO) with a target valuation significantly lower than previous estimates, aiming for up to $6.5 billion.

This figure marks a decrease from the $10 billion valuation achieved in its last fundraising round in August 2021, reflecting a broader trend of investor skepticism towards unprofitable companies.

The planned IPO price range is set between $31 and $34 per share, according to the Wall Street Journal.

The social media company plans to trade under the ticker RDDT on the New York Stock Exchange.

A New Chapter For Reddit

The decision to target a lower valuation comes amid a challenging IPO market, where recent public listings have often struggled to maintain their issue prices. Investors have shifted their focus towards profitability over rapid growth, a change that has left many newly public companies trading below their debut prices.

This strategic pricing and inclusive offering strategy may be designed to foster a positive reception on Reddit’s first trading day, especially important given the potential for backlash from the platform’s influential community of users if the stock were to underperform.

Reddit’s approach to its IPO includes several unique strategies aimed at engaging its user base and employees.

Notably, the company plans to offer shares to its most dedicated users and individual investors, diverging from the traditional approach of prioritizing large institutional investors.

Additionally, Reddit will allow some employees the opportunity to sell shares during the IPO, a move that differs from the standard practice of imposing a lock-up period to prevent immediate selling that could negatively impact the stock price.

Despite its current lack of profitability, Reddit showed signs of financial improvement in the last quarter of 2023, reporting a net income of approximately $18.5 million. However, the San Francisco-based company concluded the year with a net loss of $90.8 million.

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