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Reddit should go public at $5B, according to secondary data

TechCrunch · 1y ago

Reddit should go public at $5B, according to secondary data

Reddit is preparing for its initial public offering (IPO) and needs to determine the right valuation to attract investor interest and maximize its potential for success. Secondary investors suggest that pricing the IPO at $5 billion or less would be ideal, considering Reddit's $800 million yearly revenue and the modest revenue multiples seen in today's public market for companies in its category. Recent secondary deals and investor bids also support this valuation. However, there is a lack of significant secondary activity, which could pose a challenge. Reddit may offer shares to its top users to generate early trading momentum and avoid meme-trading territory. Pricing the IPO conservatively and delivering consistent performance are crucial for maintaining valuations and encouraging more successful IPOs in the future.

Related News

Reddit goes public: the latest updates on its IPO

The Verge

The Verge · 1y ago

Reddit goes public: the latest updates on its IPO

Reddit is planning to go public with a valuation of $6.5 billion, following a year of internal changes and increased control over its data. The company has attracted attention from tech giants like Google, who recently signed a $60 million per year deal for real-time access to Reddit's data, which can be used to train artificial intelligence. Reddit's first attempt at an IPO in 2021 was unsuccessful, but the company is now looking to leverage the excitement around generative AI to make a successful public offering. Additionally, Reddit is allocating shares for its moderators and users as part of its IPO.

Reddit has a new AI training deal to sell user content

The Verge

The Verge · 1y ago

Reddit has a new AI training deal to sell user content

Reddit has reportedly struck a licensing deal with a large AI company, providing access to its user-generated content platform. The deal, valued at approximately $60 million annually, is subject to change as Reddit's plans to go public progress. This news follows reports from October that Reddit threatened to sever ties with Google and Bing's search crawlers if training data agreements with AI firms couldn't be reached. Despite this, Reddit has proven its willingness to adopt tough stances in the past, as seen during the protests following changes to its API access pricing.

Reddit needs to be OK being Reddit

Livemint

Livemint · 1y ago

Reddit needs to be OK being Reddit

Reddit, the social network set to go public, plans to sell 22 million shares at a price range of $31 to $34, reflecting a proposed market value of up to $6.4 billion. The IPO comes at a good time as there is a strong market for tech stocks and a dearth of major IPOs. However, Reddit faces challenges such as a smaller user base, annual losses, and intense competition in the social media advertising market. The company does have some advantages in its cost structure and a burgeoning business in licensing data to AI firms. A downsized valuation from its previous private funding round will give Reddit a better starting point as it aims to show profitability.

Watch: Reddit's IPO success may hinge on AI boom

TechCrunch · 1y ago

Watch: Reddit's IPO success may hinge on AI boom

Reddit, the popular online forum, is set to go public this month, potentially signaling the end of a long IPO drought. Despite its unprofitability, Reddit's significant revenue, valued at over $800 million last year, and its potential for growth make it an enticing investment opportunity. The company's vast user-generated content serves as a valuable resource for AI companies in need of data for training their models. If the IPO succeeds, it could pave the way for more public offerings in the tech sector. However, its reception in the public market remains uncertain.

Reddit plans to reserve shares for its big users in IPO, WSJ reports

Reuters · 1y ago

Reddit plans to reserve shares for its big users in IPO, WSJ reports

Social media platform Reddit is reportedly planning to offer a portion of its IPO shares to its most active users. The company aims to reserve a number of shares for 75,000 of its top contributors, allowing them to purchase shares at the initial public offering price ahead of trading. Reddit, valued at $10 billion in 2021, has not yet responded to requests for comment. The company has been preparing for its IPO since December 2021, and if successful, it would be the first major social media company to go public since Pinterest in 2019.

Reddit aims to ride the AI wave by going public

Business Insider

Business Insider · 1y ago

Reddit aims to ride the AI wave by going public

Reddit is preparing to go public on the New York Stock Exchange with an IPO expected next month. The social media platform's listing is set to be the largest by a social media company since 2019. Unlike its early contemporaries, such as Facebook and Twitter, Reddit has delayed its move to the stock market. In its filing with the Securities and Exchange Commission, Reddit revealed surprises such as OpenAI CEO Sam Altman being its third-largest shareholder. The company's revenue rose 21% in the past year, reaching $804 million, and it listed data licensing and AI training as additional income streams.

Reddit’s IPO Filing Is Missing Something: Cofounder Alexis Ohanian

Wired · 1y ago

Reddit’s IPO Filing Is Missing Something: Cofounder Alexis Ohanian

Reddit cofounders Steve Huffman and Alexis Ohanian, who lived together for several years, playing World of Warcraft and working on Reddit, have had a strained relationship since 2020 due to disagreements over how to handle hateful content on the platform. In Reddit's recent filing with the SEC to go public, Ohanian was not mentioned, indicating the schism between the two. Huffman has been leading Reddit in recent years, developing strategies for consistent profits. Ohanian sold his ownership in Reddit in 2006 but still has some shares. Reddit plans to debut on the stock market next month.

Potential 'meme stock' Reddit to raise ~$748M in IPO, will let Redditors sell shares immediately

TechCrunch · 1y ago

Potential 'meme stock' Reddit to raise ~$748M in IPO, will let Redditors sell shares immediately

Reddit is planning to go public through an IPO, and it is garnering attention not just because of its unprofitable nature, but also due to its unique approach of involving its community members in the IPO process. Reddit intends to sell around 22 million shares, potentially raising about $748 million at the top end of the price range. What makes it interesting is that Reddit is allowing its community members to immediately sell their shares, which could potentially lead to volatility and speculation similar to the GameStop stock frenzy. However, there is also the risk of Reddit's stock being manipulated, as previously witnessed with r/WallStreetBets.

How much Sam Altman stands to gain from a Reddit IPO

Business Insider

Business Insider · 1y ago

How much Sam Altman stands to gain from a Reddit IPO

Reddit is set to go public, and OpenAI CEO Sam Altman stands to make a significant profit. Altman owns approximately 1.66 million shares of Reddit, with an estimated worth between $51.4 million and $56.4 million. Altman's ownership is affiliated with his investment vehicles and funds, such as Hydrazine Capital II. Altman has a long history as an investor, having made over 155 investments since 2010, including his investment in Reddit back in 2014. Altman expressed his long-time usage and connection with Reddit, being one of its early users.

'Pick up a second job if pay is too low': Redditor slams Indian HR for for time-wasting, insulting pay negotiations

Business Today

Business Today · 4m ago

'Pick up a second job if pay is too low': Redditor slams Indian HR for for time-wasting, insulting pay negotiations

A Reddit user shared their experience of returning to India after working in the U.S. and facing challenges during the hiring process. The process was described as gruelling and time-wasting, with shockingly low salary offers. The user criticized Indian HR practices, highlighting how candidates tend to underperform when they feel undercompensated. The suggestion was made that individuals should consider secondary jobs if their primary income is insufficient.

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