Reddit, a popular social media platform, is gearing up for its IPO with the aim of raising up to $748 million. The company is seeking a valuation of approximately $6.5 billion and plans to sell around 22 million shares at a price ranging from $31 to $34 per share. Additionally, Reddit has reserved about 1.76 million shares for select users and moderators, known as Redditors, who have created their accounts before January 1. These Redditors will have the opportunity to purchase shares without being subject to a lock-up period, which could potentially lead to increased market volatility for Reddit’s Class A common stock.
Industry Comparison and Market Impact
Reddit is not the first company to involve community members in its IPO. Other companies like Doximity, Rivian, and Airbnb have also implemented similar directed share programs. However, Reddit’s IPO is garnering significant attention as it is set to be the first major tech stock launch of the year and the first social media IPO since Pinterest went public in 2019. Investors are keenly observing Reddit’s upcoming IPO, considering the company’s annual sales growth, funding history, and market performance.
Financial Performance and Shareholder Composition
In 2023, Reddit reported annual sales of $804 million, marking a 20% year-over-year increase from the previous year. Despite the revenue growth, the company recorded a net loss of $90.8 million for 2023, which was an improvement from the $158.6 million net loss in 2022. Notable shareholders of Reddit include Tencent, Condé Nast’s parent company Advance Magazine Publishers, and OpenAI CEO Sam Altman, who served on Reddit’s board of directors from 2015 to 2022.
Overall, Reddit’s IPO plans, financial performance, and shareholder structure present a complex picture for potential investors. While the company’s revenue growth is promising, the persistent net losses raise concerns about its long-term profitability. Additionally, the inclusion of Redditors in the IPO could introduce unpredictability in the market, potentially impacting the stock price. As Reddit prepares to go public on the New York Stock Exchange under the ticker symbol “RDDT,” stakeholders will closely monitor its performance and market reception.