Reddit has been advised to target a valuation of at least $5 billion in a potential initial public offering (IPO) this spring, according to a report from Bloomberg News.
The social media network – which aggregates and rates content as well as hosting forums for users – has been holding meetings with potential IPO investors and advisers have suggested the company should target roughly $5 billion as its valuation, per Bloomberg’s report citing people familiar with the discussions.
Bloomberg noted that private trades of Reddit’s unlisted shares have been traded at a valuation below $5 billion – with would-be buyers on Rainmaker Securities’ platform submitting bids with a value in the $4.5 billion to $4.8 billion range and Forge Global Holdings’ database indicating a $4.8 billion valuation.
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However, the report added that private trades can occur at lower valuations than an IPO because unlisted shares are mostly illiquid and therefore trade at a discount compared to publicly traded securities.
Reddit is planning to launch its IPO in March after considering the move for more than three years, according to a report by Reuters citing people familiar with the matter.
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According to the timeline outlined by two of the sources, Reddit plans to make its public filing in late February, begin its roadshow to pitch potential investors in early March and complete the IPO before the end of the month.
The company will decide on the IPO valuation it will pursue closer to the time of the listing and is planning to sell about 10% of its shares in the IPO, Reuters reported.
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Reddit confidentially filed for its IPO in December 2021. It was valued at about $10 billion in a funding round it completed that year.
The U.S. IPO market has been rocked by volatility at times during the last two years which has contributed to Reddit’s decision to delay its IPO, and the social media company’s potential listing would be a prominent test of the IPO market’s recovery.
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Reuters reported that its sources cautioned that Reddit could push back its IPO plans again, as has happened previously.
Reddit did not immediately respond to a request for comment, and the company has declined to comment on its IPO plans in other reporting.
Reuters contributed to this report.