Reddit prices IPO at $34 a share, at high end of its target range

Reddit prices IPO at $34 a share, at high end of its target range

After almost 20 years as a private company, Reddit’s IPO is imminent

Reddit is poised to take the plunge into public markets after announcing pricing for its closely-watched initial public offering.

The social-media platform priced its initial public offering late Wednesday at $34 a share. That’s at the top of the target range of $31 to $34 a share that Reddit announced last week, and will give the company a valuation of about $6.4 billion. By offering 22 million shares, Reddit and its investors will raise up to $748 million.

The stock is expected to start trading Thursday on the New York Stock Exchange under the ticker symbol “RDDT.”

Reddit’s IPO has been garnering plenty of attention after a hoped-for rebound in the IPO market failed to materialize in 2023. The offering is up to five times oversubscribed, Reuters reported this week.

But Reddit, which was founded in 2005, is not yet profitable. The company has been touting the importance of artificial intelligence to its post-IPO future, noting that its content could be used to feed AI and large language models. Reddit also plans to grow its advertising business, as well as harnessing commerce on the platform, according to its S-1 filing.

Reddit is also home to the WallStreetBets subreddit, which played an important role in the meme-stock frenzy of 2021 that sent the stocks of AMC Entertainment Holdings Inc. AMC, -0.47% and GameStop Corp. GME, +0.52% skyrocketing. In what has been described as an “unprecedented” twist in the meme-stock saga, Reddit has been sparking meme chatter in the run-up to its IPO.

In its S-1 filing, Reddit cited the popularity of WallStreetBets among retail investors as a risk to its stock price, which it said could experience “extreme volatility” for reasons unrelated to the company’s “underlying business or macroeconomic or industry fundamentals.” Effectively, this is an acknowledgment that it could become a meme stock.

Reddit has also invited users and moderators who have contributed to the social-media platform to buy shares in its IPO.

Redditor Heather Lagaso seized the opportunity when she was offered Reddit shares, and is investing just under $800. “It’s a crapshoot,” she told MarketWatch this week, while also citing Reddit’s potential to become a meme stock. “I think we all know about the meme stocks, and for that reason alone, I am interested to see how this goes.”

Invest in what you know: Reddit moderator who saw meme-stock craze is buying into platform’s IPO

However, Jon Keidan, founder and managing partner of venture fund Torch Capital, warned that Reddit is “walking a tightrope” with its IPO. “The Reddit fans love Reddit. They are pretty dynamic, they are very protective of their community and they are protective of their platform,” Keidan told MarketWatch earlier this month. But a scenario could arise whereby the public markets force Reddit “to make proper financial and strategic moves” to get to profitability, he said, and that could put the company at odds with its user community.

“If that audience doesn’t like what Reddit is doing, it could be a mass exodus of users,” Keidan said. “Or it could be a mass manipulation of the stock.”

error: Content is protected !!