Reddit Inc. is considering a valuation of at least $5 billion for its initial public offering, according to sources familiar with the matter. The San Francisco-based social media company and its advisers are aiming for a mid-single-digit billion valuation, which is lower than the $10 billion it raised in 2021.
Private trades of Reddit’s unlisted shares have valued the company below $5 billion, with bids indicating a value of between $4.5 billion and $4.8 billion. The company is contemplating a possible IPO listing as soon as March, but the ultimate valuation will depend on the nascent recovery of the IPO market.
The consideration for a $5 billion valuation reflects the tech industry’s retreat from the high valuations seen during the private funding boom in 2021. Tech companies that went public during this period were valued at less than their private funding rounds, signaling a shift in the market dynamics.
Reddit, founded in 2005, gained prominence during the meme-stock era, with its forum WallStreetBets influencing the stock market and sparking a trading frenzy in 2021. Despite the volatility in the market for private companies, Reddit continues to attract a significant user base, with over 70 million daily active unique visitors as of October 2023.
As the company navigates the complexities of its IPO, the valuation target and timing remain subject to change. A spokesperson for Reddit declined to comment on the ongoing deliberations surrounding the IPO.
The tech industry’s shift away from the lofty valuations of 2021 has implications for companies like Reddit as they navigate the IPO landscape. The final valuation and timing of Reddit’s IPO will be closely watched as it could set a precedent for other tech companies considering public listings in the current market environment.
