Reddit IPO oversubscribed by up to five times: Report

Reddit IPO: Social media platform Reddit's initial public offering (IPO) has been oversubscribed between four and five times, news agency Reuters reported, quoting sources familiar with the matter. This strong demand positions the social media platform to potentially achieve the $6.5 billion valuation it aims for.

Although oversubscription doesn't guarantee a stellar performance on the stock market debut, it does indicate that the company is on track to meet its target price range of $31 to $34 per share when it prices the IPO in New York on Wednesday, the report added.

Reddit had initially tempered its valuation expectations following a $10 billion valuation in a private fundraising round back in 2021. The current IPO aims to raise as much as $748 million.

Despite boasting a dedicated user base, Reddit has operated at a loss every year since its inception in 2005 and has struggled to match the commercial success of its counterparts like Meta Platforms' Facebook and Twitter, now known as X.

The platform's emphasis on niche interests and its relatively lax approach to content moderation have raised concerns among certain advertisers. Reddit relies on volunteers from its user community to moderate content posted on its forums, a system that faced disruption in 2023 when several moderators resigned in protest against Reddit's decision to charge third-party app developers for data access.

With over 100,000 online forums, known as "subreddits," Reddit offers discussions on a wide array of topics, ranging from the whimsical to the profound, as described by co-founder and chief executive Steve Huffman.

One of Reddit's most notable moments came in 2021 during the "meme-stock" frenzy, where retail investors collaborated on the platform's "wallstreetbets" forum to invest in heavily shorted stocks like GameStop, causing significant market volatility.

To engage retail investors, Reddit has allocated 8 per cent of the total shares for eligible users and moderators on its platform, specific board members, as well as friends and family members of its employees and directors.

According to regulatory filings, Reddit recorded an average of 73.1 million daily active "uniques" – users who visit the platform at least once a day – in the three months ending December 31, 2023.

(With Reuters inputs.)