Reddit, the social media platform known for its free-form discussion forums, is planning to raise a valuation of up to $6.5 billion through an initial public offering (IPO), a significant downward adjustment from its $10 billion private placement valuation in 2021.
According to **, the company's price target range is set at $31 to $34 per share, implying that its fully diluted equity value will be between $6 billion and $6.5 billion.
Reddit's market appeal is being tested, especially against the backdrop of a general decline in tech stocks due to rising interest rates and declining participation in the post-pandemic period. In late 2021, the company had secretly submitted its listing application, but then suspended its plans due to poor market conditions. In this IPO, Reddit plans to raise funds by raising new shares and allows existing shareholders and employees to have a portion of their shares, although these sellers will be barred from further for some time after the IPO.
In order to attract and reward its loyal users and **, Reddit also intends to allocate a portion of the stake to them. In addition, the finalization of the company's market capitalization will also depend on whether the range** is adjusted in the coming weeks, as well as the timing of roadshows and public listings.
While major investors such as Fidelity have given Reddit** a high rating, the recent internal valuation correction reflects concerns about its long-term profitability. Reddit itself admitted in its prospectus that it may never be profitable, even though its chief executive, Steve Huffman, will receive incentive equity once the company reaches a market capitalization of $5 billion.
Reddit's IPO is not only a big bet on the company's future, but also a test of the current increasingly dynamic environment in the US IPO market. In the past year, large profit-seeking companies have become the mainstream of IPOs, and the success or failure of a company like Reddit, which mainly relies on advertising revenue and has accumulated losses of more than $700 million, will provide an important reference for the market.
Reddit's path to IPO reflects the reality of the highly volatile tech sector and rapidly changing market expectations, while also highlighting the challenges of how tech companies can raise capital and grow through the public markets in the current complex economic environment.
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