Reddit's highly anticipated IPO targets US$6.4 billion, setting the stage for a landmark debut

Reddit, the text-oriented, message-board-based social media firm, is aiming for a valuation of up to US$6.4 billion in its upcoming initial public offering (IPO). This figure is lower than the US$10 billion valuation achieved by the company during a 2021 fundraising round, reflecting increased expectations for profitability in the tech industry.

The IPO is expected to raise US$748 million at the top end of the price range. This valuation puts Reddit in a select group of companies that have gone public in the U.S. this year with such high valuations, making it a closely watched test of the market. At the midpoint of the range, Reddit's long-awaited IPO is expected to bring in about US$451 million, according to the company's estimates in an SEC filing.

Despite Reddit's impressive growth and popularity, its valuation still falls below that of similar companies in the social media space. For example, Meta Platforms, the parent company of Facebook and Instagram, has a market value of almost US$1.3 trillion, while Snap Inc. and Pinterest are each worth around US$20 billion. Reddit, founded in 2005 and based in San Francisco, has built a loyal user base around its community-driven platform.

Following the IPO, Reddit's ownership base will include several well-known media and tech names. The Newhouse Family-owned Advance Magazine Publishers will own 26.5% of the firm, followed by China's Tencent (9.7%) and OpenAI CEO Sam Altman (7.6%).

The IPO is scheduled to take place later this month, with Reddit already filing for a listing on the New York Stock Exchange under the ticker symbol RDDT. CEO Steve Huffman expressed optimism about the benefits Reddit's IPO will bring to Reddit's community of users.

In a letter included in Monday's filing, Huffman expressed hope that going public would provide meaningful benefits to Reddit's community. He emphasized the goal of making "our users our owners" through the IPO, noting that becoming a public company would enable this. Huffman also announced that users and moderators who have contributed to Reddit would be able to acquire shares in the IPO alongside investors.

In conclusion, Reddit's IPO marks a significant milestone for the company as it looks to capitalize on its strong user base and community-driven platform. Reddit aims for US$6.4 billion and is poised to join the ranks of other tech giants in the social media space, with hopes of delivering meaningful benefits to its community through its public offering.