Reddit‘s (RDDT.N) journey to the stock market is capturing significant attention, with its initial public offering (IPO) now reported to be oversubscribed by four to five times, according to individuals familiar with the proceedings.
This surge of interest hints at a promising start, potentially allowing the social media giant to achieve its targeted $6.5 billion valuation.
Despite the high subscription rate not ensuring a stellar stock market debut, it positions Reddit to possibly hit its desired share price range of $31 to $34 at the IPO pricing in New York, set for Wednesday.
The ongoing marketing of Reddit’s IPO, detailed by sources wishing to remain anonymous due to the sensitivity of the information, continues to draw attention.
The company, maintaining confidentiality through its spokesperson’s declined comments, has recalibrated its valuation aspirations from a lofty $10 billion in a 2021 private fundraising round to a more grounded figure, aiming to raise up to $748 million through the IPO.
Reddit’s journey since its 2005 inception has been marked by a passionate user base but persistent financial losses, contrasting sharply with the commercial triumphs of its peers like Facebook and Twitter (now X).
A critical challenge for Reddit has been its user-driven content moderation model, relying heavily on volunteer moderators.
This model has seen strains, notably in 2023, when several moderators stepped down in protest against the platform’s policy changes.
Despite these hurdles, Reddit’s vast array of 100,000 “subreddits” fosters diverse discussions across a myriad of topics, embodying the platform’s ethos as described by co-founder and CEO Steve Huffman.
The platform has also played a pivotal role in events like the 2021 “meme-stock” phenomenon, showcasing its ability to mobilize and influence.
In a nod to its community-centric approach, Reddit is reserving 8% of its IPO shares for its users, moderators, board members, and their connections, underlining the importance of its user base.
With an impressive 73.1 million daily active users recorded in the last quarter of 2023, Reddit’s IPO marks a significant milestone in its storied history, blending community engagement with financial ambition.