Reddit is aiming for a valuation between $6 billion to $6.5 billion in its upcoming initial public offering (IPO), a decrease from its previous $10 billion valuation in August 2021, the Wall Street Journal reported on Friday.
The social media platform reportedly aims to target a share price range of $31 to $34, according to WSJ.
While this marks a decrease in valuation, it is seen as part of a strategic approach to potentially enhance the stock's performance upon trading commencement. The final valuation could still change as Reddit prepares for its investor roadshow and listing, expected in the near future.
This IPO is notable not just for its size but also for Reddit's unique approach to engaging its community and employees in the process.
Unlike the typical approach where IPO shares are primarily offered to institutional investors, Reddit intends to allow individual investors and dedicated users of its forums the opportunity to purchase shares.
Moreover, the company is making an exception for some employees to sell their shares during the IPO, diverging from the common practice of restricting employee sales to stabilize the stock price post-IPO.
Reddit's decision to target a lower valuation comes amidst a challenging IPO market, where many recent public companies are trading below their debut prices.
Investors are increasingly valuing profitability over growth, a shift that impacts companies like Reddit, which, despite nearing profitability with a net income of $18.5 million in the last quarter of 2023, reported a net loss of $90.8 million for the year.
The social media platform, which has yet to turn a profit, is scheduled to list on the New York Stock Exchange under the ticker RDDT.
Should it come to fruition, Reddit’s IPO will likely be one of the biggest public offerings of the year.