New York, NY – Reddit’s highly anticipated initial public offering (IPO) is generating significant interest from investors, with reports indicating that the IPO is between four and five times oversubscribed. This oversubscription suggests strong demand for the company’s shares and could lead to a valuation of $6.5 billion.
Despite the oversubscription, there is no guarantee that Reddit will have a successful stock market debut. However, industry sources believe that the company is likely to meet its target price range of $31 to $34 per share when it goes public in New York on Wednesday.
Reddit’s journey to the public market has been marked by adjustments to its valuation expectations. Following a $10 billion valuation in a private fundraising round in 2021, the company has revised its target and is now aiming to raise as much as $748 million through its IPO.
The social media platform, known for its user-generated content and forum-style discussions, has faced challenges in monetizing its platform compared to industry competitors like Meta’s Facebook and X, formerly known as Twitter. Advertisers have expressed concerns about Reddit’s niche content focus, user-driven content moderation, and commercial viability.
Volunteer moderators on Reddit play a crucial role in maintaining the platform’s content standards. However, the company has faced backlash from some moderators over decisions related to data access and third-party app developers.
Reddit’s “wallstreetbets” forum gained attention in 2021 for its role in the “meme-stock” craze that saw retail investors band together to drive up the share prices of companies like GameStop.
To attract retail investors to its IPO, Reddit has set aside 8% of its shares for eligible users, moderators, board members, and select individuals associated with the company.
According to regulatory filings, Reddit reported an average of 73.1 million daily active users in the final quarter of 2023. The company’s IPO is expected to provide further insight into its financial performance and future growth prospects.