According to sources familiar with the matter, Reddit's (RDDT.N) initial public offering (IPO) is currently between four and five times oversubscribed, indicating strong investor interest in the social media platform. This surge in demand makes it more likely for Reddit to achieve the targeted $6.5 billion valuation it seeks.
While oversubscription doesn't guarantee a robust performance in the stock market debut, it positions the company to at least meet its planned price range of $31 to $34 per share when it prices the IPO in New York on Wednesday.
The marketing of the IPO is ongoing, and details remain confidential, as confirmed by the sources who preferred not to be identified. A Reddit spokesperson declined to comment on the matter.
Reddit had initially adjusted its valuation expectations following a private fundraising round in 2021 that valued the company at $10 billion. The current IPO aims to raise up to $748 million.
Despite having a loyal user base, Reddit has faced annual losses since its inception in 2005 and has trailed behind the commercial success of competitors like Meta Platforms' Facebook and Twitter, now known as X.
The platform's focus on niche subjects and its approach to content moderation, managed in part by volunteers from its user base, has been a concern for some advertisers. Reddit's 100,000 online forums, known as "subreddits," host discussions on a wide range of topics.
One of Reddit's most notable moments was the "meme-stock" saga in 2021, where retail investors coordinated on the "wallstreetbets" subreddit to invest in highly shorted companies like GameStop (GME.N).
To engage retail investors, Reddit has set aside 8% of the total shares for eligible users and moderators on its platform, select board members, as well as friends and family members of its employees and directors.
As of the three months ended December 31, 2023, Reddit reported an average of 73.1 million daily active "uniques" - users who use its platform at least once a day - according to regulatory filings.
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