(March 11): Reddit Inc and its investors are seeking to raise as much as US$748 million (RM3.50 billion) in what would be one of the biggest initial public offerings (IPOs) so far this year, according to people familiar with the matter.

The social media platform plans a sale of 22 million shares for US$31 to US$34 each, said the people, who asked not to be identified because the information wasn’t public yet. The company was seeking a valuation of as much as US$6.5 billion in the listing, Bloomberg News has reported.

The people said the company is setting aside about 1.76 million shares in the IPO to be bought by users and moderators who created accounts before Jan 1. Those shares won’t be subject to a lockup period, meaning the owners can sell them on the opening day of trading, according to Reddit’s filings with the US Securities and Exchange Commission.

A representative of Reddit didn’t immediately respond to a request for comment.

Reddit’s valuation

Reddit’s more than two-year slog to listing reflects the ups and downs of the market, beginning with its initial filing in 2021, when IPOs on US exchanges set an an all-time record of US$339 billion, according to data compiled by Bloomberg. Reddit raised funds that year valuing it at US$10 billion, and Bloomberg News reported the following year that it could be valued at as much as US$15 billion in an IPO.

Meanwhile, IPOs in the US plummeted as the coronavirus pandemic dragged on, totalling only US$26 billion last year, the data show. In January, Bloomberg News reported that Reddit was weighing feedback from early meetings with potential IPO investors that it should consider a valuation of at least US$5 billion.

The company is a high-profile addition to the year’s roster of newly and soon-to-be public companies. The biggest of those listings was the US$1.57 billion offering by Amer Sports Inc in January. Astera Labs Inc, a software maker focused on artificial intelligence, said in a filing last Friday that it would seek up to US$534 million in its IPO, which will likely proceed Reddit’s.

Reddit’s listing will be watched closely by IPO candidates such as Microsoft Corp-backed data security start-up Rubrik Inc and healthcare payments company Waystar Technologies Inc.

Shrinking losses

Founded in 2005, Reddit averaged 73.1 million daily active unique visitors in the fourth quarter, according to its filings. The company reported a net loss of US$91 million on revenue of US$804 million in 2023, compared with a net loss of about US$159 million on revenue of US$667 million a year earlier.

Reddit’s largest shareholder is Advance Magazine Publishers Inc, part of the Newhouse family publishing empire that owns Conde Nast, which bought Reddit in 2006 and spun it out in 2011.

The IPO is being led by Morgan Stanley, Goldman Sachs Group Inc, JPMorgan Chase & Co and Bank of America Corp, according to Reddit’s filings. The company plans for its shares to trade on the New York Stock Exchange under the symbol RDDT.