In this photo illustration a Reddit logo is seen displayed on a smartphone.
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Reddit, the 19-year-old website that hosts millions of online forums, priced its IPO on Wednesday at $34 a share, the top of the expected range.
The offering brought in $519 million, according to a press release, and values the company at close to $6.5 billion. Reddit had planned to price the deal at $31 to $34 a share.
Reddit’s public market debut on Thursday, under ticker symbol “RDDT,” will be the first for a major social media company since Pinterest’s debut in 2019 and one of the very few venture-backed tech deals of the past two years. Reddit sold 15.28 million shares in the offering, while existing shareholders sold another 6.72 million.
The company is taking a haircut from its private market valuation of $10 billion in 2021 at the peak of the tech boom. Soaring inflation and rising interest rates pushed investors out of risky assets in 2022, eventually forcing startups to downsize, slash their valuations and focus on profit over growth.
On Wednesday, data center hardware company Astera Labs went public, and saw its shares skyrocket 72%, as investors flock to anything involving artificial intelligence. However, the IPO market has been in an extended dry spell for more than two years, with Instacart, Klaviyo and Arm Holdings among the few tech companies to hold offerings over that stretch.
Reddit’s core business of online advertising faces competition from industry giants like Alphabet and Meta. The company also counts Snap, X, Pinterest, Discord, Wikipedia and Amazon’s Twitch streaming service as competitors, according to its prospectus.
Revenue increased 20% last year to $804 from $666.7 million in 2022. Its net loss in 2023 was $90.8 million, marking an improvement from the $158.6 million net loss it recorded the previous year.
The company has said in filings that data licensing could become a big money maker, and that it plans to recognize about $66.4 million in such deals in 2024. The company recently entered an expanded partnership with Google, allowing the search giant more access to Reddit data to train AI models and other tasks.
Last week, Reddit said the Federal Trade Commission sent a letter to the company inquiring about its data-licensing practices.
As part of the initial public offering, Reddit gave some of its leading moderators and users, known as Redditors, a chance to buy stock through a directed-share program. It’s a model that was previously used by Airbnb, Doximity and Rivian to reward their power users and customers.
