According to reports, Reddit has been advised to target a valuation of at least $5 billion as it prepares for an initial public offering this year, which is the lowest the social media site was worth just three years ago. It’s only a fraction of the amount that was said.
The San Francisco-based company is “targeting a mid-single-digit valuation” and could go public as early as March. reported by bloombergsaid a person familiar with the matter.
Even the proposed $5 billion valuation may be a stretch. The media pointed out that private trading in unlisted stocks on Reddit values the company at less than $4.8 billion. Bids on Rainmaker Securities’ database suggest a valuation of between $4.5 billion and $4.6 billion.
Reddit has not yet announced a final decision on whether to go public, and key details of the potential move, including the exact timing and valuation, are subject to change. This is the first public listing of a major social media platform since Pinterest’s IPO in 2019.
A representative for Reddit did not immediately respond to a request for comment.
Reddit had raised money in its latest round of funding in 2022 at a staggering $10 billion valuation after gaining renewed attention as the center of the “WallStreetBets” meme stock boom.
At the time, Bloomberg noted that had Reddit gone ahead with its IPO, it could have been worth as much as $15 billion.
According to website statistics, Reddit has more than 70 million daily active unique visitors and more than 100,000 active communities.
The tech IPO market boomed in 2020 and 2021 as capital flowed in easily during the early days of the coronavirus pandemic. But public offerings have slowed to a fraction over the past two years as soaring interest rates and tight credit conditions have caused a significant economic slowdown. within the sector.
Just 54 U.S. companies went public last year, the second-fewest since 2008, according to . Data cited by Wall Street Journal last week. Only 38 U.S. companies went public in 2022.
Companies that have proceeded with public capital increases despite the harsh economic conditions are struggling.
Last year, shares of online grocery delivery service Instacart soared to $42 shortly after its debut, but plummeted in the following weeks. The stock is currently trading at just over $25.
