Reddit goes public

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Reddit is preparing for its initial public offering (IPO) with plans to raise up to $748 million, targeting a valuation of close to $6.5 billion. The company intends to offer 22 million shares priced between $31 and $34 each. This move marks Reddit's transition from a private entity to a publicly traded company on the New York Stock Exchange under the ticker symbol "RDDT"1245141516. The IPO is notable not only for its size but also for Reddit's decision to include its user base in the offering. Approximately 1.76 million shares, or 8% of the total shares being sold, are reserved for Reddit's users and moderators. This allocation is part of a directed share program, allowing these individuals to purchase shares at the IPO price before the stock becomes available to the general public. Eligibility for this program is based on users' contributions to the platform, measured by "karma" points, and other criteria such as account creation date and moderation activities3412. Reddit's move to go public is driven by its need to fund operations and explore strategic opportunities for expansion. The company has expressed its intention to use the proceeds from the IPO for general corporate purposes, which may include licensing, acquisitions, or investments in new technologies or intellectual property710. Financially, Reddit reported $804 million in revenue for 2023, a 20% increase from the previous year, and a net loss of $90.8 million, which is narrower than the loss reported in 2022. The company has a significant user base, with over 73 million daily active users as of the end of 2023412. Reddit's approach to its IPO, particularly the inclusion of its users and moderators in the offering, is relatively unique and reflects the company's community-driven ethos. However, this strategy also introduces potential risks, such as increased market price volatility due to the participation of individual retail investors who may be more inclined to sell their shares quickly67. Investors and market observers are closely watching Reddit's IPO as it represents the first major tech debut of the year and the first social media IPO since Pinterest went public in 2019. The outcome of this IPO could serve as a bellwether for the larger IPO market, which has been in a slump, and for investor appetite for shares in unprofitable tech companies45.
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