The first tech IPO in the US this year! "American Reddit" Reddit is planning to be valued at $6.5 billion.

Reddit, the social media platform famous for its free discussion forums, is planning to achieve a valuation of up to $6.5 billion through its initial public offering (IPO), a significant decrease from its 2021 private valuation of $10 billion.

According to media reports, the company has set its target price range at $31 to $34 per share, implying a post-dilution equity value between $6 billion and $6.5 billion.

Reddit's market appeal is currently being tested, especially in the backdrop of a general decline in tech stocks due to rising interest rates in the late stages of the pandemic and decreased online engagement. At the end of 2021, the company had secretly filed for an IPO, but later paused the plan due to unfavorable market conditions. In this IPO, Reddit plans to sell new shares to raise funds and allow existing shareholders and employees to sell some shares, although these sellers will be prohibited from further selling for a period after the IPO.

In order to attract and reward its loyal users and retail investors, Reddit also intends to allocate a portion of shares to them. Furthermore, the final determination of the company's market value will depend on whether the price range is adjusted in the coming weeks, as well as the schedule for roadshows and public listing.

Although major investors such as Fidelity have previously given Reddit's stock a high valuation, recent internal valuation adjustments reflect market concerns about its long-term profitability. Reddit itself acknowledges in its prospectus that it may never achieve profitability, even though its CEO Steve Huffman will receive incentive stock options once the company's market value reaches $5 billion.

Reddit's IPO is not only a significant bet on the company's future development but also a test of the increasingly active environment in the current U.S. IPO market. Over the past year, profit-seeking large companies have become the mainstream for going public, and the success or failure of Reddit, a company mainly reliant on advertising revenue and with accumulated losses exceeding $700 million, will provide an important reference for the market.

The path of Reddit's IPO reflects the high volatility and rapid changes in market expectations in the tech industry, highlighting how tech companies navigate the challenges of raising funds and achieving growth through the public market in the current complex economic environment.