Social media giant Reddit prices its IPO at $34 per share, raising $748 million, signaling a boost to the struggling tech IPO market. (Reuters)
Reddit, the popular social media platform, has set the price for its initial public offering (IPO) at the upper end of its projected range, announcing a price of $34 per share on Wednesday. This move has allowed the company to raise a significant sum of $748 million, which is poised to inject some vigor into the currently sluggish technology IPO market.
The IPO involved the sale of 22 million shares by both the company itself and existing shareholders, resulting in a valuation of approximately $6.4 billion for Reddit. Excluding shares sold by existing stakeholders, Reddit amassed gross proceeds of $519.4 million through this offering.
Prior to the IPO, there were indications from sources, as reported by Reuters, that Reddit and its financial advisors were considering pricing the IPO either at the top of the expected range or even higher.
This decision to price the IPO at the upper end of the range represents a validation of Reddit's strategy to temper its valuation expectations. Notably, the company had previously been valued at $10 billion during a private fundraising round in 2021.
The successful pricing of Reddit's IPO, along with that of Astera Labs, marks a potential turnaround for the tech IPO market, which has seen subdued activity over the past couple of years. Notable IPOs earlier this year, such as those of BrightSpring, backed by KKR, and Amer Sports, a sportswear brand, received only tepid interest from investors.
In a separate development, Reddit announced earlier in the year a $66 million contract with Google's parent company, Alphabet, to provide training data. However, the company also revealed that it is under scrutiny from the US Federal Trade Commission regarding its practices related to the sale, licensing, and sharing of user-generated content for training AI models.
Trading of Reddit's shares is anticipated to commence on the New York Stock Exchange on Thursday, with the company trading under the ticker symbol "RDDT". Morgan Stanley, Goldman Sachs, JPMorgan Chase, and Bank of America are acting as lead underwriters for Reddit's IPO.
