Reddit announces long-awaited IPO plans, with a valuation of $6.4 billion. The social media giant is offering about 22 million shares, with individual prices ranging from $31 to $34, potentially raising the maximum amount. $748 million.
The IPO is expected to be a key indicator of whether the market is receptive to new entrants and marks a milestone for Reddit, which has been laying the groundwork for going public for more than two years. After a shaky start to IPOs this year, Reddit's move could be a sign of a comeback.
The platform, a hub of vibrant online communities, gained notoriety for the „meme stock“ phenomenon in 2021, when users of the subreddit „WallStreetBets“ orchestrated a buying frenzy of stocks such as GameStop and invested money. It shook the world. This event not only challenged hedge funds, but also solidified the influence of retail investors on the market.
In honor of its user base, Reddit reserves 8% of its shares for community members, including users, moderators, and stakeholders, with no lockup period, which could result in increased trading volatility on the first day.
As the platform prepares to go public, it faces increased scrutiny over content moderation, a key issue for advertisers and regulators alike. Reddit's reliance on volunteer moderators was a topic of discussion, especially in 2023 when several of them pulled out, citing policy disagreements.
Major financial institutions such as Morgan Stanley and Goldman Sachs will lead the underwriting, and Reddit plans to list on the New York Stock Exchange under the ticker RDDT. Despite its popularity, the company is not yet profitable, a fact that investors are closely watching as the company transitions into a public company.