Reddit Seeks Valuation Up To $6.4bn In NYSE Listing

Social media platform Reddit is to seek a valuation of up to $6.4 billion (£5bn) in an initial public offering on the New York Stock Exchange next week, the company said in a regulatory filing.

The firm said it is hoping to sell 22 million shares for between $31 and $34 each, to raise up to $748m in a listing that is being closely watched as a test of investors’ appetite for new flotations.

Reddit has reserved 8 percent of its shares for qualified users and moderators, as well as certain board members and friends and family of employees and directors.

Those buyers will not be subjected to a lock-up period and will be allowed to sell their shares on the first day of listing, if they choose to do so, adding to the potential volatility of the stock.

NYSE listing

The lead underwriters for the offering are Morgan Stanley, Goldman Sachs, JP Morgan and Bank of America Securities. Reddit filed for its offering in February and plans to trade under the ticker symbol RDDT.

The sought-for valuation is far lower than what the company was worth in 2021, when a $1.3bn funding round valued it at $10bn.

OpenAI chief executive Sam Altman holds the largest tranche of shares, worth over $400m at the desired valuation, after leading a $50m funding round into Reddit in 2014. Altman was on Reddit’s board from 2015 to 2022.

Tencent and Advance Magazine Publishers, the parent company of Condé Nast, are other notable shareholders.

Focus on profitability

Condé Nast bought the platform in 2006, a year after it was founded, before spinning it off in 2011.

Founded nearly 20 years ago, Reddit is one of the internet’s best-known entities, but has never made a profit.

According to its latest IPO prospectus the firm saw $804m in annual revenue in 2023, up 20 percent year-on-year, and narrowed its net loss to $90.8m for the year from $158.6m the year prior.

The firm is looking to license content to firms such as AI companies for training purposes, and said recently it had reached such a deal with Google.

‘Beginning of the end’

Moderators have a history of conflict with the company’s decisions, and locked key forums for weeks last year over a disagreement about API pricing, which executives said was necessary to prevent data scraping.

Many users have expressed concern about the platform’s future once it is beholden to shareholders on the public market,with one popular post calling the IPO the “beginning of the end”.