Has been updated: Investors rallied around Reddit’s initial public offering on Thursday, sending the discussion forum company’s stock up 48% in its market debut. Through the IPO, which is expected to be one of the biggest tech stocks this year, Reddit will raise $519 million, delivering a windfall to existing shareholders including Condé Nast’s parent company Advance Publications and OpenAI CEO Sam Altman. It brought a huge profit.
Reddit stock began trading on the New York Stock Exchange on Thursday (March 21) at approximately 1:15 p.m. ET under the ticker symbol “RDDT.” The initial public offering price was $34 per share, valuing Reddit at $6.4 billion (less than its previous private valuation of $10 billion). The stock price started at $47, rose to $57.80 per share (up 70%), and closed at $50.44 in regular trading, giving it a market cap of approximately $9.5 billion.
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Reddit, the 19-year-old company once touted as the “Front Page of the Internet,” will use the net proceeds from its IPO for general corporate purposes, as well as potentially “licensing, acquisitions, or investments.” He said he plans to use it also. Complementary Technology, Assets, or Intellectual Property. ”
On Wednesday, Reddit announced a price for the IPO at $34 per share, which was at the high end of its previous price range. A total of 22,000,000 shares of Class A common stock were sold in this offering (15,280,000 shares to Reddit and 6,720,000 shares to other shareholders). Additionally, Reddit has granted the underwriters a 30-day option to purchase up to an additional 3.3 million shares at the IPO price.
“We built Reddit with the belief that communities unleash the power of human creativity, giving our members a sense of belonging and empowerment,” the company said in its prospectus. “Our 100,000+ active community, known as subreddits,” has “harnessed human creativity to grow Reddit since its founding.”
Advance Publications owns 42.2 million shares of Reddit, valued at more than $2.1 billion after the IPO. Condé Nast acquired Reddit for $10 million in 2006 and spun it off in 2011. OpenAI’s Altman, who owns or controls approximately 12.16 million Reddit shares, currently has a stake worth $613 million.
Reddit says “substantially all” pre-IPO stock and convertible debt owned by Advance, Altman and other insiders are subject to a 180-day lockup period during which they cannot sell the stock. Stated. Reddit CEO Steve Huffman made $17 million in his IPO through the sale of 500,000 shares. The remaining 4.17 million shares that he directly owns are subject to lock-up restrictions.
In a novel arrangement, Reddit’s underwriters reserved a portion of the shares for moderators and other power users on the discussion platform. Up to 1.76 million shares (8% of IPO shares) will be made available to “eligible users and moderators on the platform” as well as certain board members and “friends and acquaintances” at 34 per share through a designated equity program. It was available at a price of USD. Family members of some of our employees and directors. ” These are not subject to lockup restrictions.
For 2023, Reddit reported revenue of $804 million, up 21% year over year, and a net loss of $90.8 million, compared to a loss of $158.6 million the year before. As of December 2023, Reddit had more than 500 million visitors, and in the fourth quarter he had an average of 73.1 million daily active unique users worldwide. The number of full-time employees at the company will be 2,013 as of the end of 2023.
In addition to ad revenue, Reddit monetizes posts on its platform through an AI data licensing agreement signed in January 2024, which is valued at $203 million over two to three years. The company revealed. According to Reuters, Reddit and Google announced an agreement last month that would allow the internet giant to use Reddit’s data to train its AI models. It is said to be worth about $60 million a year.
The lead underwriters for Reddit’s IPO are Morgan Stanley, Goldman Sachs, JPMorgan Chase, and Bank of America.
To celebrate Reddit’s IPO, the company shared a video of its mascot Snoo going through a “day in the life” as he prepares to head to the New York Stock Exchange and ring the bell.
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