Reddit is targeting a valuation of up to $6.5 billion in its highly anticipated IPO

Reddit is aiming for a valuation of up to $6.5 billion in its upcoming IPO, as per a source familiar with the matter.

The company intends to price its IPO shares between $31 and $34 each, as reported by The Wall Street Journal. Reddit filed for its IPO in February and is planning to trade on the New York Stock Exchange under the ticker symbol RDDT.

Employees will have the opportunity to sell Reddit stock during the offering, the source added. According to PitchBook, Reddit had a private market valuation of $10 billion after its last funding round of $1.3 billion in 2021.

At the upper end of the price range, Sam Altman's stake in the company would be valued at over $400 million. Altman, the CEO of OpenAI, led a $50 million funding round for Reddit in 2014. In a blog post, Altman noted that he had been a daily Reddit user for nine years and praised the platform's evolution from a simple time-wasting tool to something of significant interest. Altman served on Reddit's board from 2015 to 2022.

Other notable shareholders include Tencent and Advance Magazine Publishers, the parent company of Condé Nast. Condé Nast purchased Reddit a year after its founding by Alexis Ohanian and Steve Huffman, before spinning it off in 2011.

In 2021, Reddit submitted a confidential draft of its IPO prospectus to the Securities and Exchange Commission. According to its latest IPO prospectus, Reddit generated $804 million in revenue in 2023, a 20% increase from $666.7 million in the previous year. The company's net loss also decreased to $90.8 million in 2023 from $158.6 million in the prior year.

Reddit's non-employee forum moderators, known as Redditors, can participate in the IPO through the company's "directed share program," the filing stated. Similar programs were offered by Airbnb, Doximity, and Rivian, allowing community members or customers to buy shares at the IPO price.

Last summer, several prominent Reddit moderators locked their communities, or subreddits, due to a disagreement with the company's plans regarding its application programming interface (API). The API changes would have required some third-party developers to pay more to access Reddit's API, depending on their usage.

Reddit stated that the API pricing changes were necessary because the company's data was being utilized by tech firms training large language models similar to OpenAI's GPT software family.