Reddit has set its initial public offering (IPO) price at $34 per share, reaching the top end of its anticipated range. This pricing indicates strong investor interest ahead of the company’s stock market debut on March 21st, Thursday. By selecting this price point, Reddit will raise nearly $500 million through the IPO.
The company, which is 19 years old, will see its valuation start at $5.4 billion, excluding employee stock options. This figure represents a significant decrease from its last private market valuation of $10 billion in August 2021, during the peak of the last tech market boom. Reddit’s stock will begin trading on the New York Stock Exchange under the ticker symbol “RDDT,” marking one of the most eagerly awaited IPOs of the year.
How Does Reddit’s Financial Health Look?
Despite its age and size, Reddit is launching its IPO at a time when other venture capital-backed companies are closely watching the market’s response to new listings. This interest is partly fueled by Astera Labs’ recent IPO, which saw its stock price jump 72% on its first trading day, signaling strong market demand for new public companies.
However, Reddit’s financial situation contrasts with some of the other recent IPOs. Unlike Instacart and Klaviyo, which were profitable on an EBITDA basis but had lukewarm receptions on Wall Street, Reddit is still incurring net losses, with more than $90 million reported. This financial status is notable in the current market environment, where there is a strong push for profitability among newly traded companies.
In addition to its IPO, Reddit has been making moves in the artificial intelligence (AI) space. The company has started to sell its data to companies like Google for training AI models. This new venture into AI data sales could be a significant revenue source for Reddit, as it sold $203 million worth of contracts to AI companies for data access in January, according to a recent filing. This move into AI and data licensing could potentially offer a new growth channel for Reddit, despite its ongoing net losses.
Reddit’s step into the public markets through its IPO, set at a valuation significantly lower than its last private market value, alongside its strategic foray into AI data sales, forms the latest chapter in the company’s development. With its stock set to trade on the NYSE under the symbol “RDDT,” market observers and potential investors are keenly watching how Reddit’s public offering will unfold, given its current financials and the broader market’s appetite for new public companies.
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