Reddit now targets a $5 billion valuation for its upcoming IPO, which could be as early as March. The figure is lower than its initial target of $15 billion, following feedback from advisers and investors.
Reddit plans to make its public filing in late February, launch its IPO roadshow in early March, and complete the IPO by the end of the month, according to Reuters.
The same report reveals the company is seeking to sell 10% of its shares in the IPO. The new valuation reportedly reflects feedback from early meetings with potential investors.
This would be the first IPO of a major social media company since Pinterest started trading on the stock exchange in 2019.
Users connect with others on the social platform through discussion boards hosted by Reddit on wide-ranging and niche topics, with the ability to stay anonymous a key draw for its user base.
Reddit primarily generates revenue through advertising, and faces tough market competition from the likes of Facebook and TikTok to attract advertisers.
With Reddit users fueling “meme” stock rallies in recent years, the company’s IPO will test whether Redditors are willing to back the platform’s stock market debut with the same hype.
The company currently brings in a reported $800 million in annual ad revenue, lagging behind many major competitors, but it could stand to benefit from advertisers pulling out of X over concerns about brand safety.
Reddit co-founder and CEO Steve Huffman stated in a Reddit post last June that the company has yet to turn a profit, and analysis by SocialMediaToday indicates that there are existing advertising opportunities yet to be explored by the company.
One example is a rise in users searching on Reddit for real user insights into products before purchasing them.
You can learn more about Reddit on its website here.