Reddit is gearing up for its initial public offering (IPO) with a target valuation significantly lower than previous estimates, aiming for up to $6.5 billion.
This figure marks a decrease from the $10 billion valuation achieved in its last fundraising round in August 2021, reflecting a broader trend of investor skepticism towards unprofitable companies.
The planned IPO price range is set between $31 and $34 per share, according to the Wall Street Journal.
The social media company plans to trade under the ticker RDDT on the New York Stock Exchange.
A Fresh Chapter Unfolds For Reddit
The decision to target a lower valuation comes amid a challenging IPO market, where recent public listings have often struggled to maintain their issue prices. Investors have shifted their focus towards profitability over rapid growth, a change that has left many newly public companies trading below their debut prices.
Embracing strategic pricing and an inclusive offering strategy, Reddit aims to foster a warm reception on its debut trading day, conscious of potential backlash from its influential community of users in case of underperformance.
Engaging its user base and employees remains a core focus for Reddit. In a unique move, the company plans to offer shares to its most dedicated users and individual investors, stepping away from the norm of catering primarily to large institutional investors.
Furthermore, Reddit will permit some employees to sell shares during the IPO, a departure from the common practice of imposing a lock-up period to prevent immediate selling that could adversely affect the stock price.
Despite its current lack of profitability, Reddit displayed financial improvements in the last quarter of 2023, reporting a net income of around $18.5 million. Nonetheless, the San Francisco-based company ended the year with a net loss of $90.8 million.
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