Reddit Inc. and its investors are seeking to raise up to $748 million in one of the largest initial public offerings this year, according to people familiar with the matter.
The social media platform and some of its current shareholders plan to sell 22 million shares at between $31 and $34 each, said the people, who asked not to be identified because the information was not yet public. The company was seeking a valuation of $6.5 billion upon listing, Bloomberg News reported.
The company will allocate about 1.76 million shares in the IPO, which will be purchased by users and moderators who created accounts before Jan. 1, the people said. These shares will not be subject to a lock-up period, meaning holders will be able to sell them on the opening day of trading, according to a Reddit filing in February with the U.S. Securities and Exchange Commission.
A Reddit representative declined to comment.
Reddit score
Reddit’s more than two-year path to listing reflects the market’s ups and downs since its initial confidential filing in 2021, when the IPO on U.S. exchanges set an all-time record of $339 billion, according to data compiled by Bloomberg. That same year, Reddit raised funds, valuing it at $10 billion, and the following year, Bloomberg News reported that an IPO could value it as much as $15 billion.
Meanwhile, U.S. IPO volume has fallen, data shows, reaching just $26 billion last year. Bloomberg News reported in January that Reddit was evaluating early meetings with potential IPO investors and believed it should consider valuing the company at at least 5 billion dollars.
The company is a notable addition to this year’s list of new and upcoming public companies. The largest of these listings was a $1.57 billion offering for the company. Amer Sports Inc. in January. Astera Labs Inc.The artificial intelligence software maker said Friday it will seek to raise up to $534 million in an IPO likely led by Reddit.
Read more: Intel-backed Astera seeks $534 million in IPO with artificial intelligence appeal
The Reddit listing will be closely watched by IPO candidates such as the Microsoft-backed data security startup. Rubrik company. and health care payment company Waystar Technologies Inc. Their discussions began after a quartet of US listings was led by a semiconductor developer. Arm Holdings PLCSeptember’s $5.23 billion stock offering failed to spark a sustained market rally.
Reduce losses
Reddit, founded in 2005, averaged 73.1 million daily active unique visitors in the fourth quarter, according to February data. The company reported a net loss of $91 million on revenue of $804 million in 2023, compared with a net loss of about $159 million on revenue of $667 million a year earlier.
Reddit’s largest shareholder is Published by Advance Magazine Publishers Inc.part of the publishing empire of the Newhouse family, which owns Conde Nast, which bought Reddit in 2006 and spun it off in 2011.
Reddit said its millions of loyal users and moderators pose a risk as well as a benefit to the company. Reddit users have historically had a combative relationship with the site, staging riots over everything from racism on the platform to executive personnel decisions.
Meme promotions
Thousands of members of the WallStreetBets forum, which has about 15 million users and has helped popularize meme stocks such as GameStop Company. — voted to promote a message on the forum about short stocks reddit when he starts trading. Their reasons ranged from the company’s lack of profitability to fears of competition.
IPO conducts Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co. And Bank of America Corp., according to Reddit. The company plans to trade its shares on the New York Stock Exchange under the symbol RDDT.
Reddit co-founder and CEO Stephen Huffman said in a signed letter included in the filing that the company has many opportunities to grow both the platform and the business.
“Advertising is our first business, and advertisers of all sizes have found that Reddit is a great place to find high-intent clients that they can’t find elsewhere,” Huffman said. “Advertising on Reddit is growing rapidly, and we are still in the early stages of developing this business.”
AI Licensing
Reddit said it is in the early stages of allowing third parties to license access to data on the platform, including for training artificial intelligence models. The company said it entered into data licensing agreements in January with a total contract value of $203 million and a term of two to three years. The company expects revenue from these agreements to be at least $66.4 million this year, according to the filing.
Reddit also announced an agreement with Alphabet Inc.’s Google that will allow Google’s artificial intelligence products to use Reddit data to improve its technology. Improving large language models often requires enormous amounts of human-generated content.
Huffman owns shares, giving him 3.5% of the voting power. These include Class B shares, which will each have 10 votes, and Class A shares, which will be sold in the IPO, will have one vote each, the filing said. Huffman also has a voting proxy agreement with Advance.
Other major shareholders include Chief Operating Officer Jennifer Wong and FMR LLC and entities affiliated with OpenAI CEO Sam Altman, Tencent Holdings Ltd., Vy Capital and Quiet capital And Taytsit Capitalaccording to the statement.
Huffman’s co-founder, venture capitalist Alexis Ohanian, is not listed among investors with a stake of 5% or more and is not mentioned in other filings.
— With assistance from Priya Anand, Ryan Gould and Katie Roof.