Social media company Reddit is expected to become public this month. The San Francisco-based company said on Monday it is looking to raise almost $750 million (€686 million) in an initial public offering of its common stock.
ADVERTISEMENTThe company said in a regulatory filing that the IPO will include 22 million shares of Class A common stock. That means 15.3 million shares should be available, while the selling stockholders are offering about 6.7 million shares.
Reddit had been looking to become public since 2021, and officially announced its upcoming IPO last month. The company's shares are expected to be listed on the New York Stock Exchange under the "RDDT" ticker symbol.
Although IPOs are usually only available to institutional investors, last month's filing shows that Reddit regular users and moderators will be given the opportunity to buy stock.
"Our users have a deep sense of ownership over the communities they create on Reddit," said the firm.
"We want this sense of ownership to be reflected in real ownership - for our users to be our owners."
Shares priced between $31 and $34
Reddit anticipates that the IPO will be priced between $31 (€28) and $34 (€31)per share. As a comparison, Facebook’s shares cost $38 (€35) when the company went public in 2012, the equivalent of $51 (€47) in today's dollars.
At the midpoint of that share price range Reddit would raise about $451 million (€413 million), and it plans to use the proceeds for general corporate purposes, taxes and possible acquisitions.
The San Francisco-based company said that the underwriters have, at its request, reserved up to 1.76 million shares for sale at the IPO price through a directed share programme to eligible users and members of its platform, certain board members and friends and family of certain employees and directors.
The underwriters were also given the right to buy up to an additional 3.3 million shares to cover any over-allotments. Also known as "greenshoe", these special arrangements are often available in the US for the underwriters of large institutions that provide financial services - such as evaluating risks in case of IPO. The widespread mechanism allows underwriters to avoid putting their own capital at risk.
Reddit, which began in 2005, had more than 76 million people, on average, visit the platform every day in December, according to a letter from co-founder Steve Huffman that was included in the filing. It has more than 100 million unique subreddits.
In documents filed with the Securities and Exchange Commission (the US federal markets' authority), Reddit said it reported net income of $18.5 million (€16.9 million) — its first profit in two years — in the October-December quarter on revenue of $249.8 million (€228.6 million), primarily through advertising.
The company also said at the time that it struck a deal with Google, valued at approximately $60 million (€55 million), that allows the search giant to use posts from the online discussion site for training its artificial intelligence models and to improve services such as Google Search.
The agreement will also give Reddit access to Google AI models for improving its internal site search and other features.
