Reddit Pushed by Investors to Seek $5 Billion IPO Valuation

Reddit’s potential investors reportedly want the company to seek a $5 billion IPO valuation.

That’s according to a report Sunday (Jan. 28) by Bloomberg News, citing sources familiar with the discussions around the social media platform’s planned initial public offering (IPO).

In an email to PYMNTS on Sunday, Reddit declined to comment.

Those sources say Reddit is mulling feedback from meetings with potential IPO backers, with the company and its advisers aiming for a valuation in the mid-single-digit billions, though the ultimate number will depend on the recovery of the IPO market.

The report said that private trades of Reddit’s unlisted shares have valued the company at under $5 billion, and argued that such trades can indicate a lower valuation than a company might achieve when it goes public as private shares tend to be “relatively illiquid.”

The news follows reports from earlier this month that Reddit was planning to go public in March, a move that would make it the first social media company to do so since Pinterest in 2018. 

Reddit filed confidentially to go public in 2021, though the “listing was subsequently postponed due to the absence of profitability at that time,” PYMNTS wrote in November when reports of a possible IPO reemerged.

Founded in 2005, Reddit is among the most popular social media platforms, one that became a household name when one of its subreddits, WallStreetBets, played a central role in birthing a form of stock market investing known as meme stocks.

Reddit’s IPO plans are happening as a number of other high-profile companies are also making their own plans to go public. For example, stablecoin issuer Circle earlier this month filed paperwork for an IPO with the Securities and Exchange Commission.

The company had initially planned to list in 2022 via a $9 billion special purpose acquisition company (SPAC) merger, though that plan was curtailed due to a holdup in the SEC’s approval of its S-4 registration document.

Meanwhile, fast fashion brand Shein is seeking permission from regulators in China for an IPO in the U.S., a process that could hold back the company’s plans to go public.

And Sebastian Siemiatkowski, CEO of Swedish FinTech Klarna, said last week that it was “very likely” the company would list in the U.S.