The initial public offering (IPO) of Reddit will generate close to $750 million and will include the opportunity for Redditors to purchase shares. Here is the process for how it will operate.
Reddit announced that its IPO has the potential to generate roughly $748 million and that it intends to give its community members, including users and moderators, the opportunity to join in the buying and selling of stocks.
According to a legal document submitted on Monday, Reddit has announced its plans to sell approximately 15.3 million shares at a price range of $31 to $34 per share. Additionally, 6.7 million shares owned by investors will also be sold. In total, the stock sales are valued at around $748 million, with Reddit generating about $519 million in funds for the company through its initial public offering.
According to the number of shares that are currently available, the transaction would place a value of $5.4 billion on Reddit.
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He stated that they hope to give users a true sense of ownership by allowing them to become actual owners through going public. As a result, they are thrilled to offer the opportunity for investors and those who have positively impacted Reddit to purchase shares in the IPO.
Here’s what to know about Reddit’s IPO
What is the reason behind Reddit’s decision to go public?
Reddit said it’s going public to fund its operations and potentially to expand, noting in the filing that it could use the proceeds for “strategic opportunities,” although for now the platform is not planning any investments or acquisitions.
What is the reason behind Reddit giving shares to its “Redditors”?
Reddit is setting aside 1.76 million shares, equivalent to 8% of the total shares being offered in the IPO, for its users, who are referred to as Redditors.
The filing states that Redditors will have the opportunity to purchase shares. This is uncommon as companies typically only offer IPO shares to large institutional investors like investment firms and banks. It is rare for a company’s users to be part of a public stock sale.
Which members of Reddit will receive shares in the initial public offering?
According to the filing, only select Redditors will have the opportunity to purchase stock in the initial public offering.
The corporation announced its plans to include certain users and moderators in the upcoming IPO through a system of “six prioritized phases.” Selection for invitation will be based on their “karma,” or reputation score on the platform. The filing also stated that moderators will be evaluated based on their actions as moderators.
Reddit stated that if the demand for the directed share program exceeds the capacity in the initial phase, both eligible users and moderators will be given the choice to be put on a waitlist. However, being invited to take part in the directed share program does not ensure that the participant will receive a share allocation.
According to the filing, individuals who wish to participate must have established a profile prior to January 1, 2024 and meet the requirements of being a resident of the U.S. and at least 18 years of age. The offer does not extend to current or former Reddit employees.
Aimee Picchi
Source: cbsnews.com