• by Laurie Sullivan , Staff Writer @lauriesullivan, March 11, 2024

Reddit disclosed more details of its initial public offerings (IPO) that watchers are calling one of the biggest deals to date.

The company and existing shareholders reportedly want to raise as much as $748 million -- which means selling 22 million shares for $31 to $34 each, the social media platform said in an updated Monday filing. About 15.3 million of  those shares will be sold by the company and the rest by the investors, who are Reddit employees.

Reddit will list its Class A common stock on the New York Stock Exchange under the ticker symbol RDDT.

The offering would give Reddit a top valuation of about $6.4 billion, about less than the $10 billion it had been valued at in 2021 after a major round of funding. The original filing had been noted in February.

Fully diluted to include employee stock options and restricted share units, its valuation is about $6.4 billion, the filing with the U.S. Securities and Exchange Commission shows.

The filing states that Reddit plans to use the money raised from the IPO for “general corporate purposes,” and to “in-license, acquire or invest in complementary technologies, assets or intellectual property.”

Reddit gets most of its revenue today from advertising. New Street Research estimates in a report published earlier this month that Reddit’s advertising revenue will grow 32% in 2024 and 21% in 2025, as the company continues to see accelerated daily active user quarterly (DAUq) growth into the first half of this year and finds other ways to expand monetization efforts.

“We anticipate advertising revenue will be driven largely by DAUq growth in the coming years, growing at a CAGR of 15% through 2027, while advertising ARPU grows at a CAGR of 2%," according to the estimates.

In the filing, Reddit explains its advertising model, but also details a plan to license data from its site. The filing describes early-stage plans to allow third parties to license access to search, analyze, and display historical and real-time data from its platform. Some include data API access where brands and companies pay to access real-time data streams of anonymous, public discussion on Reddit via data.

The APIs can provide real-time access to topics such as sports, movies, news, fashion, and the latest trends, unlocking customer-use cases such as building third-party applications, behavioral analysis, and algorithmic trading.

Reddit also plans to license AI model training data such as the deal it completed with Google in February, where the search company will pay it $60 million annually to license its data from posts on the platform.

The company said that in January 2024, it entered into data-licensing arrangements with an aggregate contract value of $203.0 million and terms ranging from two to three years.

“We expect a minimum of $66.4 million of revenue to be recognized during the year ending December 31, 2024 and the remaining thereafter.” The company believes that its data will become a “key element” in the training of artificial intelligence (AI) large language models (LLMs) and serve as an additional monetization channel for Reddit.