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SAN FRANCISCO (AP) — Reddit is entering a new era as a public company with a market capitalization of $6.4 billion after the social media platform’s initial public offering price was $34 per share.
The price announced late Wednesday hit the high end of a target range that Reddit’s investment bankers set over the past few weeks to gauge investor demand for the company’s stock. This sets up Reddit’s stock to begin trading on the New York Stock Exchange on Thursday under the ticker symbol “RDDT,” and is likely to spark a flurry of comments on Reddit’s own platforms and competing social media outlets. This will be his debut.
Interest on Reddit is primarily due to the large number of viewers who come to the service religiously to discuss topics ranging from silly memes to existential quandaries, and to get recommendations from like-minded people. It originates from the person.
But by technology industry standards, Reddit is still extremely small for a company that’s been around since 2005.
Meta Platforms, which was launched just 18 months before Facebook, the largest social media service, had a market value of more than $1.2 trillion. Also, Meta’s annual revenue is $135 billion, while Reddit’s revenue is still less than $1 billion.
And there’s also this problem. Reddit has never been able to profit from its extensive reach, racking up cumulative losses of $717 million. The figure was even higher than the $467 million cumulative loss in December 2021, when the company first filed to go public but then called off that attempt.
In documents filed for the revived IPO, Reddit blamed its losses on its most recent focus on finding new ways to increase revenue.
But Reddit will now have more money in the bank to fund its ambitions to expand its influence and earn more revenue in the process.
The IPO raised approximately $748 million, including approximately $228 million to Reddit shareholders who chose to sell some of their shares. An additional $519 million will be allocated to Reddit, but the San Francisco-based company won’t receive the full amount because it still has to pay fees and other costs associated with the offering. Bankers still have 30 days to sell another 3.3 million shares, which would raise an additional $112 million before fees and commissions.
Reddit has set aside up to 1.76 million shares of the 15.3 million shares being offered in the IPO for users of its platform. As is typical for his IPOs, the remaining shares were purchased primarily by mutual funds and other institutional investors betting that his Reddit was poised for financial prime time.
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