Reddit's IPO Could Reach $5.5 Billion in Valuation

Reddit Inc. announced its plans on Monday to launch a closely monitored initial public offering (IPO), intending to offer 22 million shares at a per-share price range of $31 to $34. The social-media giant, known for hosting popular forums like AMAs and WallStreetBets, is aiming to raise up to $748 million through this IPO and will list on the New York Stock Exchange under the symbol “RDDT,” as disclosed in an amendment to its prospectus filed on the same day.

‍

The total IPO proceeds do not account for any additional shares that may be sold by underwriters. The company itself will be selling 15.28 million shares, generating proceeds of up to $520 million, while selling stockholders are offering 6.72 million shares valued at a potential $228.5 million. Underwriters retain the option to sell an additional 3.3 million shares, which could result in proceeds of up to $112.2 million. Noteworthy lead book-running managers for the IPO include Morgan Stanley, Goldman Sachs, JPMorgan, and BofA Securities.

‍

Post-IPO, Reddit RDDT aims to have a total of 162.28 million Class A and Class B shares. At the upper end of the estimated price range of $34 per share, the company's market capitalization is expected to reach approximately $5.5 billion. This valuation, considering potential vested options and restricted stock units, translates to a total share count of 188.7 million shares, with a value of $6.4 billion at the top of the $31-$34 price range. This higher valuation represents around eight times Reddit’s projected 2023 full-year revenue, which stands at $804 million.

‍

Despite its impressive market presence, Reddit remains a loss-making entity. For the fiscal year 2023, the company reported a loss of $90.8 million, a notable improvement compared to its 2022 loss of $158.55 million. However, the revenue figures tell a different story, with 2023 revenue totaling $804 million, up from $666.7 million in 2022.

‍

Key figures involved in the IPO include Steven Huffman, co-founder and CEO of Reddit since 2015, who plans to offer 4.17 million shares as part of the selling shareholders. Interestingly, Reddit is also allocating 1.3 million shares for its users and moderators based on their reputation and contributions to the platform. Eligible participants must be over the age of 18, reside in the U.S., and have held an account on or before January 1, 2024.

‍

As Reddit takes this significant step towards going public, the closely watched IPO has the potential to reshape the company's financial landscape and solidify its position in the ever-evolving world of social media.

‍