Social media company Reddit plans to raise almost $750 million in an initial public offering (IPO) of its common stock.
The IPO will include 22 million shares of Class A common stock, of which Reddit is offering approximately 15.3 million shares, while the selling stockholders are offering about 6.7 million shares.
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Driving the news: Reddit expects the IPO will be priced between $31 and $34 per share, with the potential to raise about $451 million at the midpoint of that range.
- The company plans to use proceeds for general corporate purposes, taxes, and possibly acquisitions.
- The underwriters have reserved up to 1.76 million shares for sale at the IPO price through a directed share program to eligible users and members of its platform, board members, and friends and family of certain employees and directors. They were also given the right to purchase another 3.3 million shares to cover any overallotments that may arise.
- Ultimately, Reddit is seeking a $6.4 billion valuation in its IPO.
The backstory: In December, Reddit had more than 76 million people, on average, visit the platform every day, and it has more than 100 million unique subreddits.
- In the October-December quarter, Reddit reported net income of $18.5 million — its first profit in two years — on revenue of $249.8 million, which came mostly through advertising.
- Reddit had also agreed to a $60 million deal with Google to allow the search engine to train its artificial intelligence models on Reddit posts.
