Reddit readies for NYSE debut post IPO
Social media platform Reddit prepares for its debut on the New York Stock Exchange following its initial public offering
The Reddit social network was set to make its trading debut Thursday after pricing robustly in an initial public offering (IPO) that suggested tremendous investor enthusiasm for new stock issuers.
Reddit is set to debut Thursday on the New York Stock Exchange under the ticker RDDT after an IPO priced at $34 a share, the company said Wednesday in a statement, which would value the platform at around $6.4 billion.
Reddit's entry comes as the tech sector is experiencing a big slowdown in IPOs since the U.S. Federal Reserve started hiking interest rates.
With easy financing scarce, Silicon Valley is seeing a shortage of companies ready to make the giant leap to go public. Pinterest is the last social media company to do so in 2019.
San Francisco-based Reddit first filed for its IPO in 2021, when the market was hot thanks to a tech growth boom linked to the COVID-19 pandemic. However, the attempt stalled as the internet economy cooled.
Unlike Facebook or X, Reddit is siloed into about 100,000 subject-focused chatrooms known as subreddits. This makes it more specialized and a place where posts are less prone to going viral.
Even so, according to its filing to U.S. regulators, Reddit has 73 million average daily users and 267 million monthly users, mainly in the United States.
Content in subreddits is mostly moderated independently. The site demands a basic standard that users must adhere to, making it less policed or centralized than Facebook or TikTok.
In its filing earlier this month, the company said it would issue 15.2 million shares priced between $31 and $34.
Following companies like Airbnb and Rivian, Reddit set aside about eight percent of the IPO shares for moderators and top users, known as "Redditors."
Future profits?
There are many questions about whether Reddit will be a successful business and whether the company has ever made a profit in its two decades of existence.
Buoyed by faithful yet often unruly users, Reddit is not seen as fertile ground for growing advertising, which will be the company's main source of revenue.
Reddit was created in 2005 and was quickly sold to Conde Nast, the publisher of Vogue and the New Yorker magazine, in an unlikely pairing.
In 2011, Reddit was spun off, though Conde Nast's parent company, controlled by the Newhouse family, remains the biggest shareholder.
OpenAI CEO Sam Altman is also a significant investor after he led a fundraising round about a decade ago.
Source: AFP
