No mention: Ohanian and his wife and former tennis star, Serena Williams, pose at a film gala in Los Angeles. Co-founder of Reddit and venture capitalist Ohanian isn’t listed among the investors with stakes of 5% or more and isn’t named elsewhere in the filing. — Reuters
NEW YORK: Reddit Inc and its investors are seeking to raise as much as US$748mil in what would be one of the biggest initial public offerings (IPOs) so far this year, according to people familiar with the matter.
The social media platform and some of its current shareholders plan a sale of 22 million shares for US$31 to US$34 each, said the people, who asked not to be identified because the information wasn’t public yet.
The company was seeking a valuation of as much as US$6.5bil in the listing, Bloomberg News has reported.
The people said the company is setting aside about 1.76 million shares in the IPO to be bought by users and moderators who created accounts before Jan 1.
Those shares won’t be subject to a lockup period, meaning the owners can sell them on the opening day of trading, according to Reddit’s filing in February with the US Securities and Exchange Commission.
A representative for Reddit declined to comment.
Reddit’s more than two-year slog to listing reflects the ups and downs of the market, beginning with its initial confidential filing in 2021, when IPOs on US exchanges set an an all-time record of US$339bil.
Reddit raised funds that year valuing it at US$10bil, and Bloomberg News reported the following year that it could be valued at as much as US$15bil in an IPO.
Meanwhile, IPOs in the United States tumbled, reaching only US$26bil last year, the data showed.
In January, Bloomberg News reported that Reddit was weighing feedback from early meetings with potential IPO investors that it should consider a valuation of at least US$5bil.
The company is a high-profile addition to the year’s roster of newly and soon-to-be public companies.
The biggest of those listings was the US$1.57bil offering by Amer Sports Inc in January.
Reddit’s listing will be watched closely by IPO candidates such as Microsoft Corp-backed data security start up Rubrik Inc and health-care payments company Waystar Technologies Inc.
Their deliberations come after a quartet of listings in the United States led by semiconductor designer Arm Holdings Plc’s US$5.23bil offering in September failed to ignite a lasting rebound in the market.
Founded in 2005, Reddit averaged 73.1 million daily active unique visitors in the fourth quarter, according to its February filing.
The company reported a net loss of US$91mil on revenue of US$804mil in 2023, compared with a net loss of about US$159mil on revenue of US$667mil a year earlier.
Reddit’s largest shareholder is Advance Magazine Publishers Inc, part of the Newhouse family publishing empire that owns Conde Nast, which bought Reddit in 2006 and spun it out in 2011.
The company plans for its shares to trade on the New York Stock Exchange under the symbol RDDT.
Reddit co-founder and chief executive officer Steven Huffman said in a signed letter included in the filing that the company has many opportunities to grow both the platform and the business.
“Advertising is our first business, and advertisers of all sizes have discovered that Reddit is a great place to find high-intent customers that they aren’t able to reach elsewhere,” Huffman said.
“Advertising on Reddit is rapidly evolving, and we are still in the early phases of growing this business.”
Reddit said it’s in the early stages of allowing third parties to license access to data on the platform, including to train artificial intelligence models.
The company said that in January it entered into data licensing arrangements with an aggregate contract value of US$203mil and terms ranging from two to three years.
It expects a minimum of US$66.4mil of revenue from those agreements this year, according to the filing.
Reddit also has announced a deal with Alphabet Inc’s Google, allowing Google’s AI products to use Reddit data to improve their technology.
Large language models often need vast troves of human-generated content to improve.
Other large shareholders include chief operating officer Jennifer Wong, as well as FMR LLC and entities affiliated with OpenAI chief executive officer Sam Altman, Tencent Holdings Ltd, Vy Capital and Quiet Capital and Tacit Capital, according to the filing.
Huffman’s fellow co-founder, venture capitalist Alexis Ohanian, isn’t listed among the investors with stakes of 5% or more and isn’t named elsewhere in the filing. — Bloomberg
