Reddit, the 19-year-old website that contains millions of online communities, priced its IPO on Wednesday at $34 per share, which was above the expected range.
According to a news release, the offering raised $519 million and valued the company at approximately $6.5 billion. Reddit had planned to price the purchase between $31 and $34 per share.
On Thursday, Reddit will make its public market debut under the ticker code “RDDT,” making it the first big social media business to do so since Pinterest in 2019. This is also one of the few venture-backed digital deals in the last two years. Reddit sold 15.28 million shares in the sale, with existing owners selling an additional 6.72 million.
The company is lowering its private market valuation from $10 billion in 2021, when the tech boom was at its peak. Soaring inflation and rising interest rates drove investors out of risky assets in 2022, pushing companies to downsize, lower their valuations, and prioritize profit above growth.
Astera Labs, a data center hardware startup, experienced a 72% increase in share price after going public on Wednesday. Investors are interested in AI-related companies. The IPO market has been stagnant for nearly two years, with just Instacart, Klaviyo, and Arm Holdings issuing offers during that time.
Reddit’s core business of internet advertising faces competition from industry leaders like Alphabet and Meta. According to the prospectus, the company’s competitors include Snap, X, Pinterest, Discord, Wikipedia, and Amazon’s Twitch streaming service.
Last year, revenue climbed by 20% to $804 million, up from $666.7 million in 2022. Its net loss in 2023 was $90.8 million, up from $158.6 million the previous year.
The company has stated in filings that data licensing might become a significant source of revenue, with intentions to recognize around $66.4 million in such transactions by 2024. The firm recently expanded its cooperation with Google, giving the search giant greater access to Reddit data for training AI models and other activities.
Last week, Reddit said that the Federal Trade Commission contacted the firm to inquire about its data-licensing policies.
As part of the initial public offering, Reddit allowed certain of its top moderators and users, known as Redditors, to purchase stock through a directed-share program. This strategy has been employed by Airbnb, Doximity, and Rivian to reward active users and consumers.
Reddit prices IPO at $34 per share in first major social media offering since 2019
