Reddit Gears Up for Major Fundraising Through Public Offering Aiming for a $750 Million IPO
The social media platform Reddit is preparing to go public and raise nearly $750 million through an initial public offering (IPO) of its common stock. According to regulatory filings, the IPO will involve 22 million shares of Class A common stock, with Reddit offering approximately 15.3 million shares and existing stockholders offering around 6.7 million shares.
Pricing and Allocation Details
Reddit anticipates pricing the IPO between $31 and $34 per share. At the midpoint of this range, the company would raise about $451 million from the offering. The funds raised are intended for general corporate purposes, potential acquisitions, and tax obligations. Notably, Reddit has reserved up to 1.76 million shares for eligible users, board members, employees, and their friends and family to purchase at the IPO price through a directed share program.
Overallotment Option and User Statistics
The underwriters have been granted the option to purchase an additional 3.3 million shares to cover any overallotments. Reddit, founded in 2005, boasted an average daily visit of over 76 million users in December, according to co-founder Steve Huffman’s letter included in the filing. The platform hosts more than 100 million unique subreddits.
Financial Performance and Strategic Partnerships
In the October-December quarter, Reddit reported its first profit in two years, with net income of $18.5 million on revenue of $249.8 million, primarily driven by advertising. Additionally, the company has struck a deal with Google, valued at approximately $60 million, allowing the search giant to use Reddit posts for training its AI models and improving services like Google Search. In return, Reddit gains access to Google’s AI models to enhance its internal site search and other features.
Listing and Ticker Symbol
Reddit’s shares are expected to be listed on the New York Stock Exchange under the ticker symbol “RDDT.”
Reddit wants to hand its enormous data on AI training.
Is reddit really worth that much?
$15 Billion for it’s IPO, this is very ambitious.
Reddit, when compared to other platforms, such as X (with 250 million daily users) valued at $19 billion and Snapchat (with 406 million DAU) valued at $27 billion, Reddit’s valuation seems disproportionately high.
Let’s take some account into cognizance, Reddit has increased its daily active users (DAU) from 52 million in 2021 to 70 million currently, it’s crucial to consider the historical context. In 2019, Reddit reported having 430 million monthly active users, suggesting a significantly larger user base at one point. Despite the recent growth in daily active users, the company’s user base appears to have declined substantially from its peak in 2019. However, the article highlights that Reddit achieved a notable milestone in the October-December quarter, reporting its first profit in two years, with net income of $18.5 million on revenue of $249.8 million. This financial performance indicates that the company is making strides towards profitability, even as it navigates the challenges of user growth and engagement.
I hope the new found love with google won’t hurt the site, It’s my favorite go to for diverse opinions on hot topics.