Reddit costs IPO at $34 per share, valuing firm at $6.5 billion

Reddit, the 19-year-old web site that hosts hundreds of thousands of on-line boards, priced its IPO on Wednesday at $34 a share, the highest of the anticipated vary.

The providing introduced in $519 million, based on a press release, and values the corporate at near $6.5 billion. Reddit had deliberate to cost the deal at $31 to $34 a share.

Reddit’s public market debut on Thursday, below ticker image “RDDT,” would be the first for a significant social media firm since Pinterest’s debut in 2019 and one of many very few venture-backed tech offers of the previous two years. Reddit offered 15.28 million shares within the providing, whereas present shareholders offered one other 6.72 million.

The corporate is taking a haircut from its personal market valuation of $10 billion in 2021 on the peak of the tech growth. Hovering inflation and rising rates of interest pushed buyers out of dangerous property in 2022, finally forcing startups to downsize, slash their valuations and concentrate on revenue over development.

On Wednesday, information heart {hardware} firm Astera Labs went public, and noticed its shares skyrocket 72%, as buyers flock to something involving synthetic intelligence. Nonetheless, the IPO market has been in an prolonged dry spell for greater than two years, with Instacart, Klaviyo and Arm Holdings among the many few tech corporations to carry choices over that stretch.

Reddit’s core enterprise of internet advertising faces competitors from trade giants like Alphabet and Meta. The corporate additionally counts Snap, X, Pinterest, Discord, Wikipedia and Amazon’s Twitch streaming service as rivals, based on its prospectus.

Income elevated 20% final 12 months to $804 million from $666.7 million in 2022. Its internet loss in 2023 was $90.8 million, marking an enchancment from the $158.6 million internet loss it recorded the earlier 12 months.

The corporate has stated in filings that information licensing might turn out to be an enormous cash maker, and that it plans to acknowledge about $66.4 million in such offers in 2024. The corporate not too long ago entered an expanded partnership with Google, permitting the search big extra entry to Reddit information to coach AI fashions and different duties.

Final week, Reddit said the Federal Commerce Fee despatched a letter to the corporate inquiring about its data-licensing practices.

As a part of the preliminary public providing, Reddit gave a few of its main moderators and customers, often called Redditors, an opportunity to purchase inventory by a directed-share program. It is a mannequin that was beforehand utilized by Airbnb, Doximity and Rivian to reward their energy customers and prospects.