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In this photo illustration, the Reddit logo is displayed on a cell phone and computer monitor on February 13, 2024 in Los Angeles, California.
Mario Tama Getty Images
Reddit is seeking a valuation of up to $6.5 billion in its upcoming IPO, according to a person familiar with the matter.
The company plans to price its IPO between $31 to $34 a share, the person said. The Wall Street Journal was first to report on the expected range and valuation.
Reddit filed to go public in February and plans to trade on the New York Stock Exchange under ticker symbol RDDT.
Employees will be allowed to sell Reddit stock during the offering, the source added. Reddit had a private market valuation of $10 billion when it last raised a funding round of $1.3 billion in 2021, according to PitchBook.
At the top of the range, Sam Altman’s shares in the company would be worth over $400 million. The OpenAI CEO led a $50 million funding round into Reddit in 2014, and said in a blog post at the time that he’d been daily Reddit user for 9 years and that the company was “an example of something that started out looking like a silly toy for wasting time and has become something very interesting.” Altman was on Reddit’s board from 2015 until 2022.
Other notable shareholders include Tencent and Advance Magazine Publishers, the parent company of publishing giant Condé Nast. A year after tech entrepreneurs Alexis Ohanian and Steve Huffman founded Reddit, Condé Nast bought the company, before spinning it out in 2011.
In 2021, Reddit filed a confidential draft of its public offering prospectus with the Securities and Exchange Commission.
The company brought in $804 million in annual revenue for 2023, representing a 20% year-over-year increase from $666.7 million, according to its latest IPO prospectus. Its net loss narrowed to $90.8 million for 2023 from $158.6 million the year prior.
Reddit’s non-employed forum moderators, known as Redditors, can participate in the upcoming IPO through the company’s “directed share program,” the filing said. Similar programs allowing community members or customers an opportunity to buy in at the IPO price were offered Airbnb, Doximity and Rivian.
Last summer, several notable Reddit moderators locked their communities, or subreddits, over a disagreement with the company’s plans related to its application programming interface, or API, used third-party developers to build apps on the platform. The change would have forced some third-party developers to pay more to access Reddit’s API, depending on their usage.
Reddit said the API-pricing changes were needed as the company’s data was being used tech companies training large language models akin to OpenAI’s GPT-family of software.
The company is now developing a data-licensing model to accompany its core online advertising business, according to the filing. Google recently announced that it has an expanded partnership with Reddit, allowing it access to the Reddit’s data.
Reddit’s Wall Street debut comes during a historically slow stretch for IPO, due in part to interest rate concerns and global economic uncertainty. Reddit’s IPO will represent the first major tech offering of the year and the first social media IPO since Pinterest’s Wall Street debut in 2019.
John Tuttle, the vice-chair of the New York Stock Exchange, said in an interview in January that the IPO market should improve in 2024, stating at the time, “We have a robust pipeline from across sectors and geographies.”
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