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Reddit valued at $US6.4 billion before sharemarket debut

Reddit's shares will begin trading on the New York Stock Exchange at $US34 a share.

Reddit's shares will begin trading on the New York Stock Exchange at $US34 a share. Photo: Getty

Reddit will enter a new era as a publicly traded company with a market value of $US6.4 billion ($9.7 billion) after the social media platform’s initial public offering was priced at $US34 a share.

The price announced late on 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 on the New York Stock Exchange on Thursday 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 – the self-anointed “front page of the internet” – 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 Facebook was started just 18 months earlier than Reddit, boasts a market value of more than $US1.2 trillion.

Meta also generates annual revenue of $US135 billion, while Reddit’s remains below $US1 billion.

Then there is this problem: Reddit has never profited from its broad reach, while piling up cumulative losses of $US717 million.

That number has swollen from cumulative losses of $US467 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 to finance its ambitions to expand its influence and reel in more revenue in the process.

The IPO raised about $US748 million, including about $US228 million for Reddit shareholders who opted to sell some of their stock.

Another $US519 million is earmarked for Reddit, but the San Francisco-based company will not receive all that money because it still has to pay commissions and other costs associated with the offering.

Bankers still have 30 days to sell another 3.3 million shares that would raise an additional $US112 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.

The remaining shares were bought primarily by mutual funds and other institutional investors betting Reddit is ready for prime time in finance.

-AP

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