Social media platform Reddit plans to launch its Initial Public Offering (IPO) in March 2024. However, a Bloomberg report highlighted that the company’s targeted valuation reflects a steep discount from its earlier funding rounds.
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Per the report, Reddit and its advisors are targeting a valuation in the mid-single-digit billions, about $5 billion. It is worth mentioning that in 2021, Reddit secured funds with a valuation of $10 billion. Therefore, the current target of $5 billion represents a significant decrease from its 2021 valuation. Reddit’s IPO strategy could be a direct consequence of waning investor confidence in IPOs, possibly influenced by challenging economic conditions such as persistently high interest rates.
Even though Reddit might go public at a reduced valuation, the timing seems appropriate, given that investors’ appetite for risk has increased amid diminishing concerns about a potential recession.
How Did 2023 IPOs Perform?
IPOs such as Arm Holdings (NASDAQ:ARM), Cava Group (NYSE:CAVA), and Oddity Tech (NASDAQ:ODD) have experienced a rebound from their initial lows and are currently trading higher than their IPO prices.
Meanwhile, TipRanks’ Stock Comparison Tool shows that the Street is cautiously optimistic about ARM, CAVA, and ODD stocks following the recent recovery rally. Nevertheless, ODD stock offers decent upside potential.
