Reddit IPO oversubscribed 5x, targets $6.5b valuation: report

The San Francisco-based social media company’s IPO is currently between four and five times oversubscribed, the report continued, citing unnamed sources.

This figure marks a decrease from the $10 billion valuation achieved in its last fundraising round in August 2021.

The planned IPO price range is set between $31 and $34 per share.

Reddit — which holds Bitcoin (BTC), Ethereum (ETH), and Polygon (MATIC) according to its IPO filing — plans to trade under the ticker RDDT on the New York Stock Exchange.

Reddit seeks to raise $748m

Reddit has yet to turn a profit.

During the last quarter of 2023, the company touted net income of approximately $18.5 million. It concluded 2023 with a net loss of $90.8 million.

Reddit, which seeks to raise $748 million via the IPO, plans to offer more than 15.2 million shares of its Class A common stock, accompanied by an additional 6.7 million shares offered by selling stockholders.

Reddit will also grant some of its employees the opportunity to sell shares during the IPO, a move that deviates from the typical process of imposing a lock-up period to prevent immediate selling that could negatively impact the stock price.

It will also reserve shares for top users who have good “karma,” a term the platform uses to gauge its users’ reputation on the site.

Reddit was sold to media company Condé Nast in 2006.

Co-founder and CEO Steve Huffman owns 3.3% of the company (his fellow co-founder Alexis Ohanian left the company in 2020).

Reddit’s other major shareholders include Condé Nast’s parent company, Advance Publications (30.1%), as well as Shenzhen, China-based Tencent (11%) and OpenAI CEO Sam Altman (8.7%).

The decision to target a lower valuation comes amid a chilly IPO market.

So far in 2024, there have been 33 IPOs on the U.S. stock market. Per Stock Analysis, as of Sunday, March 17, this is 10% more than the same timeframe in 2023.

There were just 1,429 IPOs across the globe in 2023, according to S&P Global. That’s the lowest number since 2019, and a nearly 16% drop from 2022.