Reddit Inc. and its selling shareholders have successfully raised $748 million through an initial public offering (IPO), marking the second major tech listing within two days.
Reddit’s stock, $RDDT, began trading at $47, marking a 40% increase from its $34 IPO price. Presently, the stock has surged by 60% to reach $54.50.
The offering saw Reddit pricing its shares at the top end of the marketed range, with 22 million shares sold at $34 each. This pricing aligns with earlier reports by Bloomberg News.
During the IPO, Reddit’s shares were marketed within the range of $31 to $34 per share. This pricing strategy has resulted in a market value of $5.4 billion for Reddit based on the outstanding shares listed in its filings with the US Securities and Exchange Commission. However, when factoring in stock options and restricted share units, Reddit’s fully diluted valuation is estimated at approximately $6.4 billion. Notably, this figure represents a decrease from its $10 billion valuation during a funding round in 2021, when Reddit initially announced its IPO plans.
User Stats: Reddit had about 73.1 million people using it every day and 267.5 million every week at the end of 2023. There were over 100,000 active groups on the platform, and they had a total of 1 billion posts.
Financials: Reddit’s revenue went up by 21%, and even though they had a loss, it got smaller at $90.8 million in 2023.
Reddit IPO adds to the notable lineup of newly and soon-to-be public companies in 2024, with Amer Sports Inc.’s $1.57 billion offering in January being one of the largest listings thus far.
The timing of Reddit’s listing closely follows the $713 million IPO of Astera Labs Inc., a semiconductor connectivity company focused on artificial intelligence, which saw its shares priced above the marketed range and surged 72% during its trading debut.
Earlier reports from Bloomberg News indicated that Reddit and its shareholders anticipated the IPO to be priced at or above the upper end of the marketed range. The Wall Street Journal also reported on the pricing of the shares.
Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co., and Bank of America Corp. are leading Reddit’s IPO, as stated in Reddit’s filings. The company’s shares are scheduled to commence trading on Thursday on the New York Stock Exchange under the symbol RDDT.
WallStreetBets Forum and Co-founder Comments
Thousands of members from the WallStreetBets forum, boasting approximately 15 million users and known for its involvement in meme stocks like GameStop Corp., voted to amplify a forum post discussing shorting Reddit’s stock upon its trading debut. Their rationale varied, citing reasons such as Reddit’s lack of profitability and competitive challenges.
In a signed letter included in the filings, Reddit’s co-founder and CEO, Steve Huffman, expressed confidence in the company’s growth potential across both its platform and business operations. Huffman highlighted advertising as Reddit’s primary revenue stream, noting that advertisers of all sizes recognize Reddit as an effective platform for reaching highly engaged customers. He emphasized Reddit’s ongoing efforts to enhance its advertising offerings, acknowledging that the company is still in the early stages of developing this aspect of its business.
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