Echo Van
NEW YORK (Reuters) – Reddit’s initial public offering is now oversubscribed by four to five times, people familiar with the matter said on Sunday, raising the prospect of the social media platform reaching its $6 target valuation. 5 billion
While the oversubscription doesn’t guarantee a strong stock market debut, it does mean the company is poised to at least hit its target price range of $31 to $34 a share when it evaluates its IPO in New York on Wednesday, the people said.
The sources said marketing for the IPO was ongoing and asked not to be named because the details are private. A Reddit representative declined to comment.
Reddit had already lowered its valuation expectations after the company was valued in a $10 billion private fundraising round in 2021. The company is currently seeking to raise up to $748 million in its IPO.
Despite the loyalty of many of its users, Reddit has lost money every year since its launch in 2005 and lags in commercial success behind contemporaries such as Facebook’s Meta Platforms (NASDAQ:) and Twitter, now known as X.
The focus of many Reddit users on niche topics and the platform’s somewhat loose approach to content moderation have become stumbling blocks for some advertisers. Reddit relies on volunteers from its user base to moderate content posted on its forums.
Moderators can resign from their duties at any time, as happened in 2023 when several people quit in protest of Reddit’s decision to charge third-party app developers for access to its data.
According to co-founder and CEO Steve Huffman, Reddit’s 100,000 online forums, called “subreddits,” allow for discussions on topics ranging from the “sublime to the ridiculous, the trivial to the existential, the comic to the serious.”
The company’s influential communities are best known for the 2021 “meme stock” saga, in which several retail investors banded together on the Reddit forum “wallstreetbets” to buy shares of heavily shorted companies such as video game retailer GameStop (NYSE:).
To attract retail investors, Reddit has reserved 8% of the total shares offered for eligible users and moderators on its platform, certain board members, and friends and family members of its employees and directors.
For the three months ended Dec. 31, 2023, Reddit had an average of 73.1 million daily active “unique users”—users who used its platform at least once a day—according to regulatory filings.