Reddit brings the debate to sharemarket
Reddit will enter a new era as a publicly traded company with a market value of US$6.4 billion after the social media platform’s initial public offering was priced at US$34 per share.
The price announced on Thursday came in at the top end of the target range set by Reddit’s investment bankers as they spent the past few weeks gauging investor demand for the stock.
It sets the stage for Reddit’s shares to begin trading on the New York Stock Exchange under the ticker symbol “RDDT” in a debut likely to spur a flurry of commentary on Reddit’s own platform, as well as competing social media outlets.
The interest surrounding Reddit stems largely from a large audience that religiously visits the service to discuss a potpourri of subjects that range from silly memes to existential worries, as well as to get recommendations from like-minded people.
By tech industry’s standards though, Reddit remains extraordinarily small for a company that has been around since 2005.
Meta Platforms — whose biggest social media service Facebook was started just 18 months earlier than Reddit — boasts a market value of more than US$1.2 trillion. Meta also generates annual revenue of $135 billion, while Reddit’s remains below US$1 billion.
And then there is this problem: Reddit has never profited from its broad reach, while piling up cumulative losses of US$717 million.
That number has swollen from cumulative losses of US$467 million in December 2021, when the company first filed papers to go public before abandoning that attempt.
In the documents filed for its revived IPO, Reddit attributed the losses to a fairly recent focus on finding new ways to boost revenue.
But Reddit will now have more money in the bank to finance its ambitions to expand its influence and reel in more revenue in the process.
The IPO raised about US$748 million, including about US$228 million for Reddit shareholders who opted to sell some of their stock.
Another US$519 million is earmarked for Reddit, but the San Francisco-based company won’t receive all that money because it still has to pay commissions and other costs associated with the offering.