
Reddit is valued at $6.4 billion in Wall Street IPO
March 21, 2024
American social media company Reddit makes its trading debut on the New York Stock Exchange on Thursday after its initial public offering (IPO) saw strong demand from investors.
Reddit’s debut comes at a time when the US technology sector has seen a substantial slowdown in IPOs since the US Federal Reserve began raising interest rates. The last major social media company to go public on exchanges was Pinterest in 2019.
The company’s IPO was valued at $34 per share for 22 million shares, which values the company at around $6.4 billion (around €5.8 billion), it said in a statement released on Wednesday -fair. This is substantially lower than the $10 billion valuation achieved in a 2021 private fundraising round.
Reddit first filed for an IPO in 2021, when the technology sector was enjoying a Covid-related boost. However, their efforts stalled when the boom began to wane.
The company, which will trade under the ticker RDDT on the exchanges, has never made a profit since its creation in 2005 and has accumulated losses of $717 million.
Publisher Conde Nast’s parent company and OpenAI CEO Sam Altman are some of its major shareholders.
Loyal but wandering user base
Reddit has remained relatively small when compared to other social media giants. For example, Meta’s Facebook, which was formed just 18 months before Reddit, boasts a market cap of more than $1.2 trillion.
Reddit’s platform, unlike Facebook or X, is divided into thousands of separate chat rooms, where its 73 million average daily users and 267 million monthly users discuss topics ranging from memes, recommendations, news and even investments in the stock market.
Its construction makes it more unlikely for posts to go viral, but it also came closer to its original goal of being a user-oriented forum for sharing and drawing attention to interesting information online.
Additionally, Reddit relies on an army of volunteers to moderate chat groups that consist of loyal but often unpredictable users, making it harder to attract advertisers.
The platform’s relaxed approach to content moderation is another sticking point.
In its search for new sources of revenue, Reddit in February revealed a $66 million contract to provide artificial intelligence training data to Alphabet’s Google.
However, last week the company said the US Federal Trade Commission was conducting an investigation focused on the company’s sale, licensing and sharing of user-generated content with third parties to train AI models.
Source: DW

Lori Barajas is an accomplished journalist, known for her insightful and thought-provoking writing on economy. She currently works as a writer at 247 news reel. With a passion for understanding the economy, Lori’s writing delves deep into the financial issues that matter most, providing readers with a unique perspective on current events.