Reddit’s upcoming initial public offering is generating significant interest, with sources indicating it is between four and five times oversubscribed. This strong demand increases the likelihood that the social media platform will reach its desired $6.5 billion valuation. While oversubscription does not guarantee a successful stock market debut, it does suggest that Reddit will likely hit its targeted price range of $31 to $34 per share when it goes public in New York on Wednesday.
The IPO marketing efforts are ongoing, and sources familiar with the matter have shared these insights on the condition of anonymity due to the confidential nature of the information. Reddit itself has chosen not to comment on these developments. The company had initially aimed for a higher valuation following a $10 billion private fundraising round in 2021 but has since adjusted its expectations. The IPO is set to raise up to $748 million.
Reddit’s financial performance has been a concern, with the platform consistently operating at a loss since its inception in 2005. Despite its dedicated user base, Reddit has not achieved the same level of commercial success as its peers like Meta Platforms and Twitter. The platform’s emphasis on niche topics and its lenient content moderation policies have also raised issues with advertisers. Reddit relies on volunteer moderators from its user community to oversee content, a model that has faced challenges such as mass resignations in response to certain policy decisions.
The platform’s 100,000 subreddits cover a wide range of topics, from the mundane to the profound, the humorous to the serious. Reddit gained significant attention in 2021 during the “meme-stock” frenzy, where retail investors coordinated through the “wallstreetbets” forum to drive up stock prices of companies like GameStop. In an effort to engage retail investors, Reddit has set aside 8% of its IPO shares for eligible users, moderators, board members, and select individuals associated with the company.
According to regulatory filings, Reddit had an average of 73.1 million daily active users in the last quarter of 2023. The platform continues to be a hub for diverse discussions and communities, showcasing both the strengths and challenges of its unique model.
