US social media giant Reddit Inc. is reportedly looking at a significantly oversubscribed initial public offering (IPO), which would potentially allow the company to hit its valuation target of $6.5 billion.
Sources familiar with the matter said the IPO was currently seeing a fourfold and fivefold oversubscription. However, it still does not ensure that the online forum platform would fare strongly during its March 21 debut on the New York Stock Exchange (NYSE).
That said, the situation signals optimism for Reddit, as it puts the firm on track to meet its $31-$34 price range target for its stock when it sets an IPO price on March 20. Promotion of the IPO was ongoing, according to the sources.
IPO Might Help Reddit’s Profitability Struggles
Reddit has already cut its valuation estimates after a private funding round in 2021 brought its true worth to $10 billion. The company is currently aiming to raise up to $748 million with its public listing.
While the online forum platform has a loyal user base, it has yet to see profitability since its introduction in 2005. It has also fallen behind rivals such as Meta Platforms Inc.’s Facebook and X Corp. (formerly Twitter Inc.).
Advertisers, though, have continued working with the firm due to its users’ interest in distinct topics and Reddit’s slightly lenient methods of monitoring content on its website.
The company’s moderators comprise volunteers from its user base, and it is a position that they can leave at any time of their choosing.
In 2023, several of the forum mods decided to quit following the firm’s move to charge third-party apps with substantial fees for access to its application programming interface (API).
For its IPO, Reddit is offering retail investors the opportunity to participate in the public listing by setting aside around 8% or 1,760,00 of its Class A shares for offering to 75,000 qualified users, moderators, specific members of the board, as well as family and friends of employees and directors.
The company logged approximately 73.1 million ‘uniques,’ active viewers or visitors who accessed the site at least once per day, on its platform during the three-month period ended December 31.
