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

TechCrunch · 1y

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.