Reddit poised to make its stock market debut after IPO prices at $34 per share amid strong demand

The Reddit app icon is seen on a smartphone, Feb. 28, 2023, in Marple Township, Pa. Reddit is due to begin trading on the New York Stock Exchange on Tuesday, March 21, 2024. (AP Photo/Matt Slocum, File)

The Reddit logo is displayed on a mobile device in New York, June 29, 2020. Reddit, that vast, lively and sometimes borderline shambolic repository of internet discussion, said Monday, March 11, 2024, that its pending initial public offering may be worth almost three quarters of a billion dollars. (AP Photo/Tali Arbel, File)

SAN FRANCISCO (AP) — Reddit will enter a new era as a publicly traded company with a market value of $6.4 billion after the social media platform's initial public offering was priced at $34 per share.

The price announced late Wednesday came in at the top end of the target range set by Reddit's investment bankers as they spent the past few weeks gauging investor demand for the stock. It sets the stage for Reddit's shares to begin trading Thursday on the New York Stock Exchange under the ticker symbol “RDDT” in a debut likely to spur a flurry of commentary on Reddit’s own platform, as well as competing social media outlets.

The interest surrounding Reddit stems largely from a large audience that religiously visits the service to discuss a potpourri of subjects that range from silly memes to existential worries, as well as to get recommendations from like-minded people.

By tech industry’s standards though, Reddit remains extraordinarily small for a company that has been around since 2005.

Meta Platforms — whose biggest social media service Facebook was started just 18 months earlier than Reddit —- boasts a market value of more than $1.2 trillion. Meta also generates annual revenue of $135 billion, while Reddit’s remains below $1 billion.

And then there is this problem: Reddit has never profited from its broad reach, while piling up cumulative losses of $717 million. That number has swollen from cumulative losses of $467 million in December 2021, when the company first filed papers to go public before aborting that attempt.

In the documents filed for its revived IPO, Reddit attributed the losses to a fairly recent focus on finding new ways to boost revenue.

But Reddit will now have more money in the bank to finance its ambitions to expand its influence and reel in more revenue in the process.

The IPO raised about $748 million, including about $228 million for Reddit shareholders who opted to sell some of their stock. Another $519 million is earmarked for Reddit, but the San Francisco-based company won’t receive all that money because it still has to pay commissions and other costs associated with the offering. Bankers still have a 30-day window to sell another 3.3 million shares that would raise an additional $112 million, before deducting commissions and fees.

Reddit set aside up to 1.76 million of the 15.3 million shares being offered in the IPO for users of its platform. Per the usual IPO custom, the remaining shares were bought primarily by mutual funds and other institutional investors betting Reddit is ready for prime time in finance.

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