Reddit priced its stock on Wednesday at $34 a share, the top of the anticipated range, signaling investor excitement for the company’s IPO on Thursday. The social media giant raised nearly $500 million in the offering.
Excluding employee stock options, the 19-year-old company’s valuation will start at $5.4 billion, significantly lower than its last private market value of $10 billion set in August 2021.
The highly anticipated stock debut on the New York Stock Exchange will be under the ticker symbol “RDDT.”
If Reddit’s stock performs well on its first trading day, other VC-backed companies may follow suit with their IPOs.
Astera Labs, a provider of connectivity hardware for data centers, saw a 72% increase in its stock price on its first day of trading, indicating a welcoming market for new publicly traded companies.
Despite being profitable on an EBITDA basis, Instacart and Klaviyo, two major IPOs of 2023, had tepid receptions on Wall Street last year.
Reddit is currently operating at a net loss of over $90 million, which could impact investor sentiment given the current focus on profitability for newly public companies.
However, investors may find Reddit’s involvement in the AI sector compelling. The company has started selling its data to companies like Google for AI model training, potentially leading to significant revenue growth opportunities. In January, Reddit secured contracts worth $203 million from AI firms for data access, as disclosed in a recent filing.
