Social media platform Reddit has completed its initial public offering (IPO), pricing its shares at the upper end of the market range, thereby achieving a valuation of $6.4 billion. This move marks a significant milestone for Reddit as it transitions into a publicly traded company.
Fundraising Details
The IPO has generated substantial funds, with $229 million allocated to existing shareholders and $519 million raised for Reddit itself, totaling $748 million. Despite this, Reddit will incur commissions and other associated costs related to the listing, reducing the net proceeds.
Share Offering
A total of 22 million shares are being offered at $34 each, with an option for bankers to sell an additional 3.3 million shares within a 30-day window, potentially raising an extra $112 million. This places Reddit’s IPO among the largest ever conducted by a social media platform, although its financial performance has been inconsistent.
Financial Outlook
Despite its high valuation, Reddit has yet to achieve profitability, reporting a loss of $91 million last year. To enhance revenue generation, the company aims to diversify its income streams, including bolstering its advertising business and exploring opportunities to monetize user data.
User Involvement
In a departure from traditional IPO practices, Reddit is offering a portion of its shares to its user base, demonstrating a commitment to its community. However, there are concerns that the fervor surrounding the IPO may lead to speculative trading behavior, with some users planning to engage in short selling activities.
SOURCE: Ref Image from Variety
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