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Reddit’s IPO Oversubscribed 5x, Aims for $6.5 Billion Valuation: Reuters Report

According to a report by Reuters, Reddit is poised to achieve a valuation of $6.5 billion through its upcoming initial public offering (IPO). The San Francisco-based social media platform’s IPO is reportedly between four and five times oversubscribed, as per undisclosed sources.

This valuation marks a decrease from Reddit’s previous fundraising round in August 2021, where it attained a $10 billion valuation. The planned IPO price range is currently set between $31 and $34 per share. Reddit intends to trade under the ticker symbol RDDT on the New York Stock Exchange.

Despite its popularity, Reddit has yet to turn a profit. While it reported net income of approximately $18.5 million in the last quarter of 2023, it concluded the year with a net loss of $90.8 million. Through the IPO, Reddit aims to raise $748 million, offering over 15.2 million shares of its Class A common stock along with an additional 6.7 million shares from selling stockholders.

In a departure from traditional practices, Reddit plans to allow some employees to sell shares during the IPO, rather than imposing a lock-up period. Additionally, it will reserve shares for top users with high “karma,” a metric used to gauge user reputation on the platform.

Reddit was originally acquired by media company Condé Nast in 2006. Co-founder and CEO Steve Huffman currently owns 3.3% of the company, while fellow co-founder Alexis Ohanian departed in 2020. Major shareholders include Condé Nast’s parent company Advance Publications (30.1%), Tencent (11%), and OpenAI CEO Sam Altman (8.7%).

This decision to target a lower valuation comes amidst a tepid IPO market. As of Sunday, March 17, there have been 33 IPOs on the U.S. stock market in 2024, representing a 10% increase compared to the same period in 2023. However, global IPO numbers saw a decline in 2023, reaching the lowest point since 2019 with a nearly 16% drop from the previous year, according to S&P Global.

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