SAN FRANCISCO (AP) — Reddit, the vast, lively and sometimes chaotic online discussion platform, is preparing to debut on the New York Stock Exchange and the company estimates it will be worth up to $6.4 billion.
The Initial Public Offering (IPO) also makes Reddit one of the first internet companies to offer shares to its collaborators or “Redditors” who comment on its panels, as well as its moderators. That’s a difference from other IPOs, where shares are typically sold to institutional investors and fund managers who in turn begin trading those securities on the open market. Adding users to that mix could make for a much livelier stock market debut, and that’s not necessarily a good thing, although it could be an interesting experience.
Reddit plans to offer 22 million shares at a price between $31 and $34, according to documents the company filed with the United States Securities and Exchange Commission (SEC) on Monday.
The company could raise between $473.6 million and $519.4 million based on the sale of approximately 15.3 million shares.
Existing Reddit investors will sell an additional 6.7 million shares as part of the offering, raising between $208.4 million and $228.6 million for their own portfolios. Reddit itself will not benefit from those sales.
Following the standard procedure for initial offerings, those shares will end up in mutual funds, hedge funds and other investment instruments, which in turn will offer them to their clients.
Reddit also plans to sell up to 1.76 million shares — 8% of the total offering — to a mix of certain board members and “family and friends” of certain board members and employees. This, of course, is in addition to the moderators and Redditors who give Reddit its current character.
The difference is that these investors, who will pay the initial offering price for their shares, will not be subject to “mandatory retention contracts” under which company officers and employees have to retain the securities for a defined period of time. , which could be six months. That means Redditors and moderators will be able to sell their shares immediately if they wish.
But one of the risks for investors is the volatility of stock prices.
The main concern is that a sudden increase in demand for shares that are not subject to retention contracts will lead to a sharp rise in price, followed by an equally abrupt fall once the enthusiasm and investors who have bet on the downside wear off. start to crowd.
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2024-03-12 15:26:37
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