Key points:

  • Demand for Reddit shares is 4-5 times higher than the number of subscribers.
  • This increases the company’s chances of achieving its desired valuation of $6.5 billion.
  • The IPO price range is set at $31-34 per share.

Significant interest in Reddit’s initial public offering, with 4-5 times the number of subscribers, increases the social media platform’s chances of achieving its desired $6.5 billion valuation.

While strong interest is no guarantee of a successful stock market debut, it does indicate the company’s readiness to achieve its target price range of $31 to $34 per share for its IPO in New York on Wednesday.

Reddit ratings

Reddit, previously valued at $10 billion during a private fundraising in 2021, has adjusted its expectations ahead of its IPO. The company currently plans to raise up to $748 million, which is below its initial estimate.

Despite its loyal user base, Reddit has experienced losses every year since its founding in 2005. The company lags behind competitors such as Meta Platforms (Facebook’s parent company) and Twitter (now X) in terms of commercial success.

Reddit’s focus on niche topics and liberal approach to content moderation are turning off some advertisers. The platform relies on volunteer users to moderate content on the forums.

The instability of the moderation team is also a problem. In 2023, a number of moderators resigned in protest of Reddit’s decision to charge third-party app developers for access to platform data.

How Reddit prepared for its IPO

In an effort to attract retail investors to its IPO, Reddit has reserved 8% of the total shares for users, platform moderators, certain board members, and their friends and family members.

For the three months ending December 31, 2023, Reddit averaged 73.1 million unique users daily, according to company filings.

This information may be of interest to potential investors, as it demonstrates the engagement of Reddit’s audience and its potential for growth.

In addition, on the eve of the initial public offering, many were struck by the news of Reddit’s deal with Google to protect the debutant company’s copyrights in the future.