US Markets
Thursday, March 21st, 2024 3:35 pm EDT
Key Points
- Reddit priced its IPO at $34 per share, exceeding expectations and raising $519 million. This marks the first major social media company to go public since 2019.
- The company’s valuation is lower than its 2021 peak due to a shift in investor preference and a dry spell in the tech IPO market.
- Reddit is looking towards data licensing as a potential future revenue stream, but the FTC is currently inquiring about these practices.
Reddit, a popular online forum website, priced its initial public offering (IPO) at $34 per share, exceeding the expected range and raising $519 million. This values the company at nearly $6.5 billion, marking the first major social media company to go public since Pinterest in 2019.
The IPO comes after a two-year dry spell in the tech IPO market, with Reddit taking a haircut from its $10 billion valuation in 2021 due to a shift in investor preference towards profitability over growth. Despite facing competition from established giants like Alphabet and Meta, Reddit’s revenue grew 20% year-over-year to $804 million in 2023, with a narrowing net loss.
The company sees data licensing as a potential future revenue stream, projecting $66.4 million in such deals for 2024. This strategy recently involved an expanded partnership with Google for data access. However, the Federal Trade Commission is currently inquiring about Reddit’s data-licensing practices.
In a move to engage its user base, Reddit offered its most active users (Redditors) a chance to participate in the IPO through a special stock purchase program, similar to what other companies like Airbnb have done.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/03/20/reddit-prices-ipo-at-34-per-share-sources-say.html
