Social media company Reddit Inc. is considering an initial public offering. Inside sources who preferred to remain anonymous told Bloomberg that initial meetings had been held with potential investors and that a valuation of the company of at least five billion dollars (about 4.6 billion euros) had been discussed. However, this sum could be considered too high.

In the Forge Global Holdings Inc. database, non-core activities indicate a valuation of around $4.8 billion. Offers on the Rainmaker Securities platform even suggest a range between $4.5 billion and $4.8 billion. Bloomberg notes that these types of deals often indicate a lower valuation than the company could achieve in an initial public offering.

Final considerations for the IPO have not yet been made and both the valuation target and timeline could still change. A Reddit spokesperson has so far declined to comment.

The valuation of technology companies is falling

Reddit's potential undervaluation shows how much the financial climate has changed since the private funding boom of 2021. According to Bloomberg, Reddit raised money that year at a valuation of $10 billion. It could even have been worth up to $15 billion in an initial public offering.

However, the IPO market has since collapsed and tech giants like Instacart, valued at $39 billion in 2021, have seen their valuations plummet. The company went public in September 2023 at a valuation of $9.9 billion and now has a market value of approximately $7.1 billion.

Reddit, founded in 2005, became a symbol of the so-called era of meme stocks when the site's WallStreetBets forum shook the stock market and drove the prices of companies such as GameStop Corp. and AMC Entertainment Holdings Inc. soaring.