Reddit's IPO targets $6.4 billion valuation

Approximately 15.3 million of the 22 million shares will be sold by the company, while the remaining shares will be sold by Reddit employees and other investors

Reddit has disclosed additional information regarding what is anticipated to be one of the most significant initial public offerings of the year.

The company, along with its investors, intends to offer a total of 22 million shares at a price ranging from $31 to $34 each, as stated in a filing with the Securities and Exchange Commission on Monday. If the pricing falls at the upper end of this range, it would generate proceeds of $748 million. Approximately 15.3 million of the 22 million shares will be sold by the company, while the remaining shares will be sold by Reddit employees and other investors.

The anticipated pricing range for Reddit establishes a fully diluted valuation range of $5.8 billion to $6.4 billion, representing a significant decrease from the company's private valuation of $10 billion after its last funding round in August 2021.

In an effort to appeal to the retail traders who have played a crucial role in its r/WallStreetBets forum, Reddit has allocated 8% of the total shares available for users and moderators who created accounts before January 1, as well as for friends and family of various board members and employees. These shares will not be subject to lockup restrictions, allowing their owners to sell them on the first day of official trading.

Reddit's initial public offering has been in the works since 2021. That was at the peak of the meme-stock mania, when troves of retail investors active on subreddits such as r/WallStreetBets executed short squeezes on stocks including GameStop and AMC, driving prices "to the moon."

The performance of Reddit's IPO will be closely monitored by Wall Street as an indicator of the overall IPO market's health. Recent offerings, such as those from Birkenstock and Instacart, have struggled to gain significant traction.