Reddit’s long-awaited IPO priced at top range as valuation dips to $6.4 billion from $10 billion in 2021

In a much-anticipated move, Reddit, the internet’s most famous online forum, has finally made its grand entrance onto the New York Stock Exchange stage, stirring up excitement among investors and setting a tone for forthcoming public listings in 2024.

The social aggregation giant, boasting tens of millions of daily users, strategically priced its initial public offering (IPO) between $31 to $34 per share, landing at the top end of that range and successfully raking in a hefty $748 million.

According to reports from Bloomberg, a substantial 22 million shares were offloaded by shareholders at $34 each, pegging Reddit’s fully diluted valuation at a formidable $6.4 billion. However, this figure marks a significant drop from its lofty $10 billion valuation attained during a 2021 funding round.

The San Francisco, California-based Reddit’s IPO debut is being closely watched as a litmus test for market sentiment and investor confidence, particularly in light of recent fluctuations triggered by the Federal Reserve’s tightening measures.

A unique aspect of Reddit’s offering is its allocation of approximately 8% of total shares to qualified users, moderators, board members, and associates, a move aimed at fostering a sense of community ownership within its ecosystem.

Leading the charge in this landmark event are financial heavyweights including Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co., and Bank of America Corp., steering Reddit’s shares under the ticker symbol “RDDT.”

The journey to this public listing has been a long and winding road for Reddit, spanning over two years since its confidential IPO filing back in December 2021. Economic headwinds caused by the Fed’s actions prompted delays, but now, the stage is set for Reddit’s moment in the spotlight.

As Reddit takes center stage, all eyes are on its performance and the broader implications for the IPO landscape. Julian Klymochko, CEO of Accelerate Financial Technologies, notes, “If Reddit trades poorly, it will cast a shadow over the IPO market,” Reuters reported.

Yet, amidst this cautious optimism, there are signs of a thaw in the IPO freeze that has gripped the markets. The successful debut of Astera Labs, with a staggering 72% surge on its first trading day, offers a glimmer of hope for Reddit and other companies eyeing public listings.

Reddit’s IPO also outshines notable offerings from tech luminaries like Instacart and Klaviyo Inc. in 2023, signaling a resurgence in IPO activity. With $8.7 billion already raised through IPOs on US exchanges this year, representing a 150% surge from the same period last year, Reddit’s splashy market debut is poised to make waves in the tech investment landscape.

Founded in 2005 by Alexis Ohanian, Reddit has transformed into a social news aggregation powerhouse, attracting billions in monthly traffic. As it prepares for its IPO, Reddit’s journey exemplifies the resilience and dynamism of tech startups in the ever-evolving landscape of digital innovation.

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