Reddit Targets $6.4 Billion Valuation in Anticipation of Initial Public Offering
Reddit, a leading global website, is seeking a valuation of up to $6.4 billion as it prepares to go public on the New York Stock Exchange next week. According to a filing in the United States, the social media giant, which has yet to turn a profit in its nearly 20-year history, plans to float 22 million shares at a price range of $31 to $34 each. While the move toward an initial public offering (IPO) represents a significant financial milestone for Reddit, concerns among users persist about potential fundamental changes to the platform.
In a letter to prospective investors released weeks ago, co-founder Steve Huffman emphasized the desire to give users a sense of ownership, reflecting their deep connection with the communities they create on Reddit. The IPO will make some shares available for public purchase for the first time, with a portion set aside for select Reddit users and moderators.
Reddit, known for its open forum structure where users engage in discussions and post content on various topics, generates revenue primarily through advertising. Despite its popularity, the company has consistently reported losses, exceeding $90 million in the previous year. Reddit recently entered into a deal with Google, allowing the tech giant access to Reddit data for training artificial intelligence (AI) models.
The $6.4 billion valuation sought in the IPO is notably lower than the $10 billion valuation achieved in a private fundraising round in 2021. Major shareholders include Advance Magazine Publishers, Tencent, Fidelity, and Sam Altman, CEO of OpenAI, the organization behind ChatGPT.
Unlike other social media platforms like Facebook or TikTok, Reddit offers users a unique environment where they often feel free to express themselves. Moderated by users, known as moderators, the platform’s power has been evident in instances such as the Gamestop saga in 2021, where Reddit users collaborated to influence the share price of the US video game retailer. However, concerns among users persist that the IPO may alter the platform negatively, shifting focus from user satisfaction to shareholder interests and potentially impacting the quality of the product.
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