Wall Street is astir over the upcoming Reddit initial public offering (IPO) in which the company will debut its already-selected “RDDT” ticker. So, what do you need to know about the RDDT stock launch?
At the high end of its IPO range of $31-$34, the Reddit IPO could bring in $748 million. This would involve the sale of roughly 22 million shares, although Reddit will only profit from the sale of about 15 million (worth approximately $519 million). The other 7 million shares represent selling shareholders.
Interestingly, Reddit has also isolated 1.76 million shares for users of its website, colloquially referred to as “Redditors.” Redditors will be able to purchase the segregated shares at the offering price and sell them upon the IPO without being subject to the standard six-month lock-up period most early investors face following a stock launch.
Reddit did point out that Redditors who act on the IPO offer “could result in increased volatility in the market price” of RDDT stock.
The discussion forum website is set to launch its IPO next week, on March 21.
What Does the RDDT Stock IPO Mean for Reddit?
The Reddit IPO marks the first major tech stock debut of the year, and the first big social media launch since Pinterest (NYSE:PINS) went public in 2019.
The Reddit IPO has been a long-time coming. If you recall, the company first filed a confidential draft of its IPO prospectus back in 2021. That same year, Reddit raised $1.3 billion in private funding, earning a valuation of $10 billion. This is actually more than its current targeted valuation of up to $6.4 billion.
Reddit has enjoyed strong financial growth over the past few years. In 2023, Reddit reported $804 million in annual sales, a 20% increase from the year prior. It also narrowed its net loss to $90.8 million, a 43.7% decrease from 2022.
Reddit enjoys a relatively star-studded cast of shareholders currently, including Tencent (OTCMKTS:TCEHY), and OpenAI Chief Executive (and notorious Elon Musk rival) Sam Altman. Altman was actually on Reddit’s board of directors for seven years, from 2015 to 2022.
Some users have expressed concerns that a Reddit IPO would result in negative changes to its famously user-operated website. Though Reddit leadership has repeatedly iterated, it has no intention of hurting the user experience as it pursues a public launch.
“Our users have a deep sense of ownership over the communities they create on Reddit,” wrote co-founder Steve Huffman in a letter to potential investors last month. “We want this sense of ownership to be reflected in real ownership – for our users to be our owners. Becoming a public company makes this possible.”
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
