Reddit's (RDDT.N), opens new tab initial public offering is four to five times oversubscribed, sources said Sunday, making it more likely the social media company will reach its $6.5 billion value.
Oversubscription does not ensure a positive stock market debut, but it implies the business is positioned to at least hit its targeted price range of $31 to $34 per share when it lists the IPO in New York on Wednesday, sources said.
The sources stated the IPO marketing was ongoing but requested anonymity due to confidentiality. A Reddit rep declined comment.
After a $10 billion private funding round in 2021, Reddit has lowered its valuation projections. The company's IPO seeks $748 million. Reddit has lost money every year since 2005, trailing competitors like Meta Platforms (META.O) despite the commitment of many of its users.
Some advertisers have criticized Reddit's weak content filtering and niche user concentration. Reddit moderates forum material with user volunteers. In 2023, some moderators resigned in protest of Reddit's data-access fees for third-party app developers.
Reddit's 100,000 "subreddits," or online forums, include "the sublime to the ridiculous, the trivial to the existential, the comic to the serious," according to co-founder Michael Huffman.
The company's influential forums are best known for the 2021 "meme-stock" scandal, in which retail investors used Reddit's "wallstreetbets" forum to buy shares of massively shorted businesses like GameStop.
Reddit has reserved 8% of the shares for eligible users and moderators, select board members, and friends and family of its workers and directors to attract retail investors. A regulatory filing shows that Reddit had 73.1 million daily active "uniques" in the three months ended Dec. 31, 2023.
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