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Social media company Reddit priced its stock at $34 ahead of a scheduled public offering in New York on Thursday, the highest level of its stock price guidance to date, giving it a fully diluted valuation of $6.4 billion. Ta.
The pricing, which the company announced in a statement Wednesday, values Reddit significantly below the $10 billion it received in its previous private financing in 2021.
Based on the number of shares outstanding immediately after the IPO, the price implies a market cap of $5.4 billion. Including options that are likely to be exercised, the value reaches $6.4 billion.
The high end of the price range is a sign of confidence in the company’s prospects. Earlier in the day, shares of AI infrastructure group Astera Labs soared 72 percent in its public debut on the Nasdaq exchange. The incident added momentum to Reddit’s IPO book, according to people familiar with the transaction.
In total, the IPO raised $519 million for Reddit, with an additional $229 million raised from existing shareholders who sold their shares in the sale. Approximately 2 million shares are also allocated to the site’s loyal users and moderators.
Demand for the IPO increased during the roadshow, resulting in a more than 10-fold increase in the number of Reddit stock subscribers, according to people familiar with the transaction.
But some investors expressed concerns about the quality of the orders that drove trading demand, which they said equated to a ‘B’ level book. To improve the quality of who buys shares and at what prices, bankers typically give more shares to asset managers who want to own the company, rather than “flipping” allocations for a quick profit. you can choose to distribute.
The stock is scheduled to begin trading on the New York Stock Exchange under the ticker “RDDT.”
Reddit’s IPO made headlines as the first high-profile company to go public in a quiet market in the past two years. The stock is seen as a test of appetite for the rest of this year’s listing candidates, but it also faces unique challenges, including the risk of becoming a “meme stock.” Unruly users are already discussing intentionally shorting the company’s stock when it goes public. transaction.
In the run-up to its IPO, San Francisco-based Reddit tightened its once-lax moderation policies to shore up its advertising business, which accounted for most of last year’s $804 million in revenue. Reddit has never made an annual profit. The company posted a loss of $91 million in 2023, according to regulatory filings.
Reddit said during its roadshow that it plans to diversify its revenue, including adding e-commerce features and selling data to artificial intelligence groups.
Reddit CEO Steve Huffman has indicated that he will sell his 500,000 shares in the IPO for a profit of $17 million. He will also receive an additional stock award as the listing values the company above $5 billion.
