The social networking site Reddit stated on Monday that it is looking for a valuation of up to $6.4 billion in its U.S. initial public offering (IPO), as it approaches one of the most anticipated stock market debuts of the past few years. To generate up to $748 million, the firm and a portion of its current investors plan to sell roughly 22 million shares at a price of $31 to $34 a share.

The IPO will take place more than two years after the company started making plans to go public and will serve as a significant barometer of investor interest in fresh listings. The IPO market's rebound has been patchy thus far this year.

The $10 billion Reddit was valued at following financing in 2021 is less than the planned valuation, on a fully diluted basis.

Reddit, which debuted in 2005, quickly rose to prominence as a major figure in social media culture. Its well-known emblem, an extraterrestrial on an orange backdrop, is among the most recognizable images on the internet.

According to co-founder Steve Huffman, its 100,000 online forums, known as "subreddits," facilitate discussions on a wide range of subjects, from "the sublime to the ridiculous, the trivial to the existential, the comic to the serious."

In his letter, Huffman stated that he had sought assistance from one of the subreddits in order to stop drinking. In 2012, the users of the website conducted an "AMA" (also known as "ask me anything") with former US President Barack Obama.

The "meme-stock" incident of 2021, in which a number of retail investors banded together on Reddit's "wallstreetbets" forum to purchase shares of heavily shorted firms, including video game retailer GameStop, is the most well-known story involving the company's prominent communities. The incident turned retail traders into formidable competitors and destroyed hedge funds that had placed bets against those equities. Additionally, it was included in a 2023 Seth Rogen movie.

Reddit has set aside 8% of the total shares up for grabs for eligible users and moderators on the platform, select board members, and friends and family of its directors and staff in order to reach out to the retail market. Since they won't be subject to a lock-up period, these buyers may decide to sell their shares on the opening day of trading, which might lead to an increase in price volatility.

The buzz on the platform will play a role in this unique IPO, according to Reena Aggarwal, director of Georgetown University's Psaros Center for Financial Markets and Policy. The offering's primary underwriters are Morgan Stanley, Goldman Sachs, J.P. Morgan, and Bank of America Securities.

The New York Stock Exchange is where Reddit plans to list under the ticker "RDDT." Reddit hasn't had the same level of success as its peers, such as Meta Platforms' Facebook and Twitter (formerly known as X), despite having a cult-like following.

The business stated in a previous filing that it was "in the early stages of monetizing (its) business" and that it had never made a profit. Reddit reported that in the three months ending December 31, 2023, it had an average of 73.1 million daily active "uniques"—users who use the platform at least once a day. 

Another cause of contention for marketers has been the company's approach to content filtering. The content submitted on its forums is moderated by volunteers drawn from its user community. Moderators have the option to resign from their positions at any moment. This was the case in 2023, when a number of them did so in opposition to the business's plan to charge outside app developers for access to its data.

"There's no question that as a public company, Reddit is going to be under much more scrutiny in terms of their platform, what's being put out on the platform and how it's being monitored," Aggarwal stated. "Regulators and policymakers are quite concerned about these issues."