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Written by Echo One and Anirban Sen
(Reuters) – Social media platform Reddit on Wednesday priced its initial public offering at the high end of its target range of $31 to $34 per share, raising $748 million and boosting the depressed technology IPO market. brought about a long-awaited revitalization.
Reddit and its existing shareholders sold 22 million shares at a price of $34 per share, valuing Reddit at approximately $6.4 billion.
To attract individual investors, Reddit set aside 8% of the total shares in the offering for eligible users and moderators on the platform, certain board members, employees and friends and family of directors.
Excluding shares sold by existing shareholders, Reddit raised total proceeds of $519.4 million in the IPO. Reuters reported earlier Thursday that Reddit and its bankers were guiding the IPO to price it at or above the high end of a specified range.
This maximum price setting validates the company’s decision to lower its valuation expectations after being valued at $10 billion in a private funding round in 2021.
If Reddit and Astera Labs’ offering is successful, it could boost the tech IPO market after two years of mostly stagnant activity. Earlier this year, the entry of other major companies into the stock market, including KKR-backed Brightspring and sportswear brand Amer Sports, received a lukewarm response from investors.
loyal user base
Despite the loyalty of its many users, Reddit has lost money every year since its launch in 2005, outpacing contemporary commercial successes such as Metaplatforms’ Facebook and Twitter (now known as X). I’m falling behind.
The niche focus of many Reddit users and the platform’s somewhat lax approach to content moderation are a sticking point for some advertisers.
In February, Reddit announced a $66 million deal to provide artificial intelligence training data to Alphabet Inc.’s Google, as it seeks new sources of revenue.
But Reddit said last week that the U.S. Federal Trade Commission is conducting an investigation focused on the company’s sales, licensing, and sharing of user-generated content with third parties to train AI models.
Reddit relies on volunteers from its user base to moderate the content posted on its forums.
In 2023, moderators can decide to step down from their roles at any time, as several people did in protest of Reddit’s decision to charge third-party app developers for access to their data.
Co-founder and CEO Steve Huffman said Reddit’s 100,000 online forums, known as “subreddits,” offer a wide variety of content that ranges from “the sublime to the ridiculous, the trivial to the existential, the humorous. They can converse on a wide range of topics, from the simple to the serious.
The company’s influential community is known for its “memes” in 2021, when several individual investors collaborated on Reddit’s “WallStreetBets” forum to buy stocks in heavily shorted companies such as video game retailer GameStop. It is best known for its “Stocks” story.
Reddit had an average of 73.1 million daily active “uniques” (users who use the platform at least once a day) in the three months ending Dec. 31, 2023, according to regulatory filings. It is said that there was
Reddit stock is scheduled to begin trading on the New York Stock Exchange on Thursday under the ticker “RDDT.”
Morgan Stanley, Goldman Sachs, JPMorgan Chase & Co., and Bank of America are the lead underwriters for Reddit’s services. Morgan Stanley also secured a leading role in Astera’s IPO.
(Reporting by Echo One and Anirban Sen in New York; Editing by Greg Romeliotis and Jamie Freed)
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