NEW YORK, March 21 — The Reddit social network was set to make its trading debut Thursday after pricing robustly in an initial public offering that suggested greater investor enthusiasm for new stock issuers.
Reddit is set to debut Thursday on the New York Stock Exchange under the ticker RDDT after an IPO priced at US$34 dollars a share, the company said Wednesday in a statement, which would value the platform at around US$6.4 billion.
The entry of Reddit comes as the tech sector is seeing a big slowdown in IPOs since the US Federal Reserve started hiking interest rates.
With easy financing scarce, Silicon Valley is seeing a dearth of companies ready to make the big leap to go public, with Pinterest being the last social media company to do so in 2019.
San Francisco-based Reddit first filed for its IPO in 2021 when the market was hot thanks to a Covid-linked growth boom for tech, but the attempt stalled as the internet economy cooled.
Reddit — unlike Facebook or X (formerly Twitter) — is siloed into about 100,000 subject-focused chatrooms known as subreddits, making it more specialised and a place where posts are less prone to going viral.
Even so, Reddit has 73 million average daily users and 267 million monthly users, mainly in the United States, according to its filing to US regulators.
Content in subreddits is mostly moderated independently, with the site demanding a basic standard that users must adhere to, making it less policed or centralised than Facebook or TikTok.
In its filing earlier this month, the company said that it would issue 15.2 million shares priced between US$31 and US$34.
Following the lead of companies like Airbnb and Rivian, Reddit set aside about eight percent of the IPO shares for moderators and top users, known as “Redditors.”
Future profits?
There are a lot of questions on whether Reddit will be a successful business and the company has never turned a profit in its two decades of existence.
Buoyed by faithful yet often unruly users, Reddit is not seen as fertile ground to grow advertising, which will be the main path for the company to make money.
Reddit was created in 2005 and was quickly sold to Conde Nast, the publisher of Vogue and the New Yorker magazine, in an unlikely pairing.
In 2011, Reddit was spun-off, though Conde Nast’s parent company, controlled by the Newhouse family, remains the biggest shareholder.
OpenAI CEO Sam Altman is also a major investor after he led a fundraising round about a decade ago. — AFP
