On Wednesday, Reddit set the price of its stock at $34 per share, which is at the high end of the expected range. This indicates that investors are highly interested in the company's initial public offering (IPO) happening on Thursday. Through the offering, the popular social media platform managed to raise nearly $500 million.
Without taking into account employee stock options, the company, which is 19 years old, will have a starting valuation of $5.4 billion. This is significantly lower than its previous private market value of $10 billion, which was recorded in August 2021 during the peak of the previous technology market boom.
The stock, which is currentlyReddit has priced its shares at $34 each, which is the highest point in the expected range. This suggests that investors are enthusiastic about the company's upcoming initial public offering (IPO) on Thursday. In the offering, the social media giant raised close to $500 million.
When excluding employee stock options, the company, which has been around for 19 years, will have a starting valuation of $5.4 billion. This is a significant decrease from its previous private market value of $10 billion, which was reached in August 2021 during the peak of the previous technology market boom.
Investors have been eagerly awaiting the stock debut of Reddit, which is set to take place on Thursday at the New York Stock Exchange. The stock has garnered significant anticipation and will be traded under the ticker symbol "RDDT."
If Reddit's stock performs well on its first day of trading, other venture capital-backed companies that have been waiting in the wings will likely start their IPO processes soon after.
Astera Labs, a company that provides hardware for connecting data centers, saw a 72% increase in its stock price on its first day of trading on Wednesday. This indicates that the public markets are ready for new publicly traded companies.
Despite being profitable based on EBITDA (earnings before interest, taxes, depreciation, and amortization), Instacart and Klaviyo, which were the main IPOs of 2023, received lukewarm receptions on Wall Street last year.
However, Reddit is still experiencing net losses of over $90 million, which could negatively impact the company's stock as there is a strong push for newly traded companies to achieve profitability.
Nevertheless, investors may find Reddit's involvement in the AI (artificial intelligence) industry appealing. The company has recently started selling its data to Google for training AI models, and there may be more similar licensing agreements in the works. This could potentially become a significant source of revenue growth for the business. In January, the company sold contracts worth $203 million to AI companies for access to its data, as stated in a recent filing.