After months of anticipation, shares of Reddit, Inc. are expected to begin trading today. The company’s initial public offering will be the most closely watched IPO of 2024 yet. It’s the most high-profile public listing of a legacy tech company in years and the first social media giant to go public since Pinterest IPO’d in 2019. Here’s what you need to know:
When is Reddit’s IPO?
Reddit will hold its initial public offering today, Thursday, March 21, 2024.
What is Reddit’s stock ticker?
Reddit shares will trade under the stock ticker RDDT.
Which exchange will Reddit shares trade on?
Reddit shares will trade on the New York Stock Exchange (NYSE).
What is Reddit’s IPO share price?
RDDT shares will begin trading at $34 per share, the company announced yesterday. That’s the top of an expected range that Reddit had revealed in a filing to the Securities and Exchange Committee (SEC) earlier this month.
How many Reddit shares will be available?
There will be 22 million RDDT shares of its Class A common stock available in the company’s initial public offering. Of those, 15,276,527 will be sold by Reddit. However, the remaining 6,723,473 will be sold by existing shareholders in the company.
How much is Reddit raising in its IPO?
At $34 per share, the sale of the 22 million shares will raise $748 million. However, Reddit says it will not receive any proceeds from the 6.7 million shares sold by its existing stockholders. That means that of the 15.2 million shares Reddit sells, the company will raise just over $519 million.
What is Reddit’s valuation?
At an IPO price of $34 per share, Reddit’s valuation stands around $6.5 billion, notes CNBC. That’s down from the $10 billion the company was valued at in 2021.
Why is the Reddit IPO such a big deal?
For a few reasons. First, IPOs have had a tough time for the past few years, indicating there is weaker demand from investors looking to assume more risk by taking on shares in newly public companies. If Reddit’s IPO is a failure, it suggests the IPO market could stay depressed for a while. But if it’s a success, Reddit’s IPO could spur other companies to go public sooner rather than later.
Second, Reddit’s IPO is also the first from a social media giant since Pinterest went public back in 2019. Given there are only a few giant social media platforms, one going public is an event that draws a lot of media and investor attention. Facebook went public in 2012 and Twitter went public in 2013 (Elon Musk took the company private in 2022). Snapchat owner Snap went public in 2017.
Investors are hoping that the Reddit IPO will be more like Facebook, whose stock (ticker: META) traded around $31 per share during its IPO in 2012 but trades at over $500 per share today. What investors likely don’t want is another Pinterest (PINS), whose shares aren’t up much today over its existing IPO price, or Snap (SNAP), whose shares today are less than half of what they were at its IPO.
How are Reddit users reacting to the IPO?
That’s what many people are concerned about. It’s unknown how Reddit users will react to the IPO. The company burned a lot of bridges with its community members and subreddit moderators after subreddits began protesting API changes last year that saw the company begin to charge third-party Reddit clients fees that would put many out of business.
The API changes led many powerful Reddit communities and their moderators to protest by causing their subreddits to go dark. Things escalated when Reddit then threatened the removal of the moderators, who are essentially unpaid workers and are one of the big reasons why Reddit has thrived since its founding in 2006.
Normally, disgruntled users wouldn’t be a problem for a platform’s IPO. But Reddit is also a place where the meme stock craze began, highlighting that its various financial and investing subreddits can have a measurable effect on a company’s stock. If Reddit users are holding a grudge, they could negatively impact Reddit’s IPO by using the company’s own platform to rally investors to short the stock.
Is Reddit concerned about its users doing this?
No one knows what’s in the mind of Reddit’s board. However, the company offered a Directed Share Program (DSP) to select Reddit users with high Karma (the points users receive for being helpful on the site) to buy RDDT shares at its IPO price.
The Directed Share Program ended on March 5, but as CNBC notes, many Reddit users seemed skeptical of partaking in it due to concerns about the platform’s finances. Reddit recorded a net loss of $90.8 million in 2023; however, that was a smaller loss than in the year prior. In 2022, Reddit says it lost $158.6 million.
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