Reddit Eyes $6.5 Billion Valuation in Landmark IPO, Setting Stage for Tech’s Big Market Debut
Reddit is set for a significant milestone, aiming for a valuation of up to $6.5 billion in its highly anticipated Initial Public Offering (IPO). Sources close to the situation revealed that the social media giant plans to offer shares priced between $31 and $34 when it lists on the New York Stock Exchange under the symbol RDDT. This move marks a pivotal moment as Reddit prepares for the first major tech IPO of the year and the first social media platform to go public since Pinterest in 2019.
The upcoming IPO has generated buzz, especially since Reddit’s valuation was pegged at $10 billion during a $1.3 billion funding round in 2021, according to data from PitchBook. Among the notable investors, Sam Altman, CEO of OpenAI, could see his shares valued at over $400 million. Altman, a long-time Reddit user and a former board member, invested $50 million into Reddit back in 2014. Other prominent shareholders include Tencent and Advance Magazine Publishers, the parent company of Condé Nast, which acquired Reddit a year after its founding by tech entrepreneurs Alexis Ohanian and Steve Huffman and later spun it off in 2011.
Reddit has shown robust financial growth, reporting $804 million in annual revenue for 2023, a 20% increase from the previous year, and a narrowed net loss of $90.8 million, down from $158.6 million. In an innovative move, Reddit will allow its community of non-employed forum moderators to participate in the IPO through a directed share program, echoing similar opportunities offered by companies like Airbnb (ABNB) and Rivian (RIVN).
However, the road to IPO has not been without its challenges. Last summer, a dispute over changes to Reddit’s API pricing led several prominent moderators to lock their communities in protest. These changes were intended to manage the costs associated with tech companies using Reddit’s data for training large language models similar to OpenAI’s GPT series.
In response to evolving business needs and the growing importance of data, Reddit is developing a data-licensing model to complement its core online advertising revenue. This strategy includes an expanded partnership with Google for data access. As Reddit steps onto Wall Street, it does so amid a cautious IPO market, influenced by interest rate worries and global economic uncertainty, setting the stage for a landmark event in the tech and social media landscape.
