- Reddit plans to raise $750 million in IPO, priced between $31 and $34 per share.
- The company aims for a valuation of $6.4 to $6.5 billion despite never turning an annual profit.
- Reddit's IPO filing reveals unique user moderation approach and new revenue streams like data licensing for AI training.
Reddit is looking to raise almost $750 million in an initial public offering of its common stock, with the IPO priced between $31 and $34 per share. The company plans to use the proceeds for general corporate purposes, taxes, and possibly acquisitions.
What to know: Reddit is gearing up for its initial public offering (IPO) with plans to raise nearly $750 million. Despite never having turned an annual profit, the social media platform is aiming for a valuation of around $6.4 to $6.5 billion. The company's IPO filing highlights its unique approach to user moderation, likening it to a democratic city where users curate content and establish community norms. Reddit is exploring new revenue streams, such as licensing its data for training Large Language Models (LLMs), which could potentially impact its business as AI services trained on Reddit data might reduce direct traffic to the platform.
Looking ahead: In its IPO filing, Reddit disclosed that it intends to offer 22 million shares of Class A common stock, with approximately 15.3 million shares being sold by the company and the remaining 6.7 million shares by existing stakeholders. The IPO is expected to be priced between $31 and $34 per share, potentially raising around $451 million at the midpoint of the range. Reddit also plans to allocate shares for certain users and moderators through a directed share program, allowing them to participate in the IPO without a lock-up period.
Deeper details: Reddit's IPO is highly anticipated as it marks the first major tech debut of the year and the first social media IPO since 2019. The company's recent financial performance shows a year-over-year increase in sales, reaching $804 million in 2023. Despite a net loss of $90.8 million for the same year, Reddit's strategic partnerships, like the one with Google for AI training, demonstrate its commitment to innovation and growth. Notable shareholders include Tencent, Advance Magazine Publishers, and former Reddit board member Sam Altman.
The backstory: The IPO filing also reveals Reddit's plans to list its shares on the New York Stock Exchange under the ticker symbol RDDT. With more than 76 million daily visitors and over 100 million unique subreddits, Reddit has established itself as a diverse and engaging platform for users worldwide. The company's decision to involve Redditors in its IPO through directed share programs aligns with a growing trend among companies like Doximity, Rivian, and Airbnb, aiming to engage their communities in the public offering process.
The bigger picture: As Reddit prepares for its IPO, investors are closely monitoring its progress and market performance. The company's innovative approach to user-generated content and potential revenue streams from AI partnerships position it for future growth and profitability. With a focus on community engagement and strategic partnerships, Reddit aims to leverage its unique platform to attract investors and drive value for shareholders in the competitive social media landscape.
