April 24, 2024
  • Reddit officially submitted the corporate filing on Monday for its upcoming IPO. 
  • The company aims to raise at least $750 million and reach a total valuation of $6.4 billion
  • Out of 22 million stocks, 1.76 million will be available for Reddit moderators to buy

Reddit To Raise $750 Mn in IPO To Reach Valuation of $6.4 Billion

Reddit is all set for one of the most-awaited IPOs of the year. As per a statement made by the company on Monday, they are expecting to reach a valuation of at least $6.4 billion with this IPO round. And as for the IPO itself, they are aiming to raise at least $750 million.

The IPO was first filed in February under the careful guidance of Goldman Sachs, J.P. Morgan Bank of America Securities, and Morgan Stanley.

The corporate filing which was filed on Monday said that they are planning to sell 22 million shares, each ranging between $31 to $34. As per reports, it’s planning to be listed on the New York Stock Exchange under “RDDT.”

The official filing comes 2 years after the company started preparing to go public. While many investors are looking forward to the event, it’s hard to say whether it’s the right time for an IPO or not. That’s because the IPO scenario this year hasn’t been great, and market recovery has been quite uneven.

Read More: Reddit includes Bitcoin, Ethereum, And Polygon to its Balance Sheet ahead of its IPO

Reddit’s IPO Is One Of A Kind: Here’s Why

Investors and market experts are all eagerly waiting for this IPO. This will be the first social media platform to go public since Pinterest’s IPO in 2019.

What makes this IPO even more interesting is that Reddit has announced that out of these 22 million shares, 1.76 million will be available to Reddit moderators and loyal users who have been on the platform for a long time.

This is the company’s way to express their gratitude and uphold the vision they believe in i.e. Reddit is a community for the people by the people.

It’s unusual for any social media company to offer an IPO to regular users because it can increase volatility. Unlike corporate investors, these users won’t be required to be in a lock-in period (the period during which they won’t be allowed to sell their stocks) which can make the entire process risky for the others.

But Reddit has promised to distribute the stocks through a guided program and is confident in its decision so far.

Speaking about the same, the director of the Georgetown University Psaros Center for Financial Markets and Policy, Reena Aggarwal said “This is a unique IPO and what happens with it is going to be partly driven by the buzz on the platform,”

Read More: The social news and community platform Reddit gets hacked

Challenged For Reddit 

Reddit is like no other social media platform. Despite being a popular name, it has failed to draw the same attention that many of its contemporaries do.

It also has a very unconventional content moderation policy. Instead of having an internal team, it depends on its users to volunteer. Of course, they are under no legal obligation to carry out their duties so they can quit anytime like they did back in 2023 when they protested against Reddit charging third-party developers for accessing the platform.

The platform has never played by the rules, as we can see from the way they went about their IPO. So naturally, it’ll be under a lot more scrutiny than others.

Also, in the last 3 years, only Meta’s platforms have managed to perform well in the stock market whereas Pinterest and Snapchat have suffered. So all eyes will be on Reddit this year to see if it can break the pattern.

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