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Reddit Targets $6.4 Billion Valuation as IPO Nears

By:Thomas Westwater

Reddit looks for $6.4 billion valuation in IPO. The stock is set to start trading on March 21.

  • Reddit targets a $6.4 billion valuation for IPO.
  • RDDT attracts short interest from WallStreetBets.
  • The listing will dictate the IPO environment for 2024.

Reddit, the website known as the “front page of the internet,” is seeking a valuation of $6.4 billion for its upcoming U.S. initial public offering (IPO).

The social media platform’s IPO has been years in the making and should serve as a bellwether for the IPO market in 2024 following a series of disappointments in 2023.

Reddit updated its S-1 with the Securities and Exchange Commission (SEC) on Monday, which unveiled the valuation, shares offered, and the target price. Reddit aims to sell 22 million shares, with an anticipated price target of between $31.00 and $34.00 per share. The updated S-1 states:

“We estimate that we will receive net proceeds from this offering of approximately $450.9 million (or $552.7 million if the underwriters exercise their over-allotment option in full), based upon an assumed initial public offering price of $32.50 per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.”

Previously, Reddit, which aims to trade under the ticker “RDDT,” was valued at $10 billion in a private fundraising round back in 2021. The nearly 50% haircut is likely more from the market itself rather than anything specific to Reddit. Last year, many IPOs flopped and traded below their listing prices, including Instacart (CART) and Birkenstock (BIRK).

Traders are eager to short Reddit

Reddit is made up of communities called subreddits where users discuss anything from news and politics to carpentry and home renovations. However, there is also WallStreetBets, a subreddit notorious for the meme stock craze of 2021.

The subreddit mainly focuses on options trading but favors risky plays that often make or break someone’s account. There have been numerous posts of users screenshotting trades that have either resulted in massive gains or a blown-up account.

In fact, the subreddit is already filled with posters looking at shorting the stock, and while RDDT won’t have options for the first week, traders may attempt to short the shares—assuming they can find lendable shares in the first week. In any case, all eyes will be on RDDT when it starts trading on March 21.

Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater

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