Social network Reddit announced its stock offering price was at the top of its expected range before going public on the New York Stock Exchange, signaling enthusiasm from investors.
Reddit, which will debut on Thursday under the stock ticker “RDDT,” will go public at a stock price of US$34 per share, the company said in a statement, which would value the platform at about US$6.4 billion.
Reddit’s entry comes as the technology sector has seen a major slowdown in IPOs since the US Federal Reserve started raising interest rates.
With financing difficult to obtain, Silicon Valley is experiencing a shortage of companies ready to take the big step of going public, with Pinterest being the last social media company to do so in 2019.
Reddit, based in San Francisco, first listed its IPO in 2021 when markets were hot thanks to a Covid-related growth boom for technology, but those efforts stalled when the internet economy cooled.
Reddit, unlike other major social media platforms, is divided into around 100,000 subject-based chat rooms known as subreddits, making it more specialized and a place where posts are less susceptible to going viral.
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Despite this, Reddit has 73 million average daily users and 267 million monthly users, primarily in the United States, according to filings with U.S. regulators.
Content on subreddits is largely moderated independently, with the site demanding basic standards that users must follow, making the site less monitored or centralized than other major social media platforms.
In a filing earlier this month, the company said it would issue 15.2 million shares priced between US$31 and US$34.
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Following in the footsteps of companies like Airbnb and Rivian, Reddit allocated about 8% of its IPO shares to top moderators and users, known as “Redittors.”
There are many questions about whether Reddit will be a successful business, especially since the company has never turned a profit in its two decades of existence.
Hogged by loyal but often uncontrolled users, Reddit is not considered fertile ground for developing advertising, which would be a major way for companies to make money.
Reddit was created in 2005 and quickly sold to Conde Nast, publisher of Vogue and the New Yorker magazines, in an unusual pairing. In 2011, Reddit was spun off, although parent company Conde Nast, controlled by the Newhouse family, remains the company’s largest shareholder.
OpenAI CEO Sam Altman is also a major investor after he led a fundraising round about a decade ago. (AFP/Z-3)
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