In this photo illustration we see a Reddit logo displayed on a smartphone.
Mateusz Slodkowski | Sopa Images | Light rocket | GettyImages
Reddit, the 19-year-old website that hosts millions of online forums, priced its IPO on Wednesday at $34 a share, the top of its expected range.
The offering brought in $519 million, according to a press release, and values the company at close to $6.5 billion. Reddit had planned to price the deal between $31 and $34 per share.
Reddit’s public market debut on Thursday, under the symbol “RDDT,” will be the first for a major social media company since The one from Pinterest debuting in 2019 and one of the very few venture-backed tech deals in the past two years. Reddit sold 15.28 million shares in the offering, while existing shareholders sold another 6.72 million.
The company is reducing its private market valuation by $10 billion in 2021 at the height of the tech boom. Soaring inflation and rising interest rates pushed investors out of risky assets in 2022, ultimately forcing startups to downsize, cut their valuations and focus on profits rather than growth.
Data center hardware company Wednesday Astera laboratories went public and saw its shares skyrocket 72% as investors flock to all things AI. However, the IPO market has been in a prolonged dry spell for more than two years Instagram, Klaviyo AND Arm holds among the few tech companies to hold offerings on that stretch.
Reddit’s core business, online advertising, faces competition from industry giants such as Alphabet AND Half. The company also counts HurriedX, PinterestDiscord, Wikipedia and From Amazon The streaming service Twitch is as a competitor, according to its prospectus.
Revenue rose 20% last year to $804 from $666.7 million in 2022. Its net loss in 2023 was $90.8 million, marking an improvement from its net loss of $158.6 million dollars recorded in 2022.
The company said in filings that data licensing could become a big money maker and that it expects to recognize about $66.4 million in such deals in 2024. The company recently entered into an expanded partnership with Google, allowing the search giant greater access to Reddit data. to train artificial intelligence models and other tasks.
Last week, Reddit said the Federal Trade Commission sent a letter to the company requesting information about its data licensing practices.
As part of the IPO, Reddit has offered some of its top moderators and users, known as Redditors, the ability to buy shares through a direct share program. It is a model previously used by Airbnb, Doximity AND Riviano to reward their power users and customers.
CLOCK: What a Reddit IPO would mean for capital markets.
