Social Media Company Reddit Rides High In IPO

The Reddit social network said Wednesday it had priced at the top of its expected range ahead of going public on the New York Stock Exchange, in a sign of enthusiasm by investors.

Reddit, set to debut Thursday under the ticker "RDDT", will be made public at $34 dollars a share, the company said in a statement, which would value the platform at around $6.4 billion.

The entry of Reddit comes as the tech sector is seeing a big slowdown in IPOs since the US Federal Reserve started hiking interest rates.

With easy financing scarce, Silicon Valley is seeing a dearth of companies ready to make the big leap to go public, with Pinterest being the last social media company to do so in 2019.

San Francisco-based Reddit first filed for its IPO in 2021 when the market was hot thanks to a Covid-linked growth boom for tech, but the attempt stalled as the internet economy cooled.

Reddit --- unlike Facebook or former-Twitter X --- is siloed into about 100,000 subject-focused chatrooms known as subreddits, making it more specialized and a place where posts are less prone to going viral.

Even so, Reddit has 73 million average daily users and 267 million monthly users, mainly in the United States, according to its filing to US regulators.

Content in subreddits is mostly moderated independently, with the site demanding a basic standard that users must adhere to, making the site less policed or centralized than Facebook or TikTok.

In its filing earlier this month, the company said that it would issue 15.2 million shares priced between $31 and $34.

Following the lead of companies like Airbnb and Rivian, Reddit set aside about eight percent of the IPO shares for moderators and top users, known as "Redittors."

There are a lot of questions on whether Reddit will be a successful business and the company has never turned a profit in its two decades of existence.

Buoyed by faithful yet often unruly users, Reddit is not seen as fertile ground to grow advertising, which will be the main path for the company to make money.

Reddit was created in 2005 and was quickly sold to Conde Nast, the publisher of Vogue and the New Yorker magazine, in an unlikely pairing.

In 2011, Reddit was spun-off, though Conde Nast's parent company, controlled by the Newhouse family, remains the company's biggest shareholder.

OpenAI CEO Sam Altman is also a major investor after he led a fund-raising round about a decade ago.