(Bloomberg) -- Reddit Inc. is weighing feedback from early meetings with potential investors in its initial public offering that it should consider a valuation of at least $5 billion, according to people familiar with the matter, even as it is estimated below that figure in the volatile market for shares of private companies.
The San Francisco-based social media company and its advisers are targeting a valuation in the mid-single-digit billions, the people said, asking not to be identified as the information is private. The ultimate figure will depend on the IPO market's nascent recovery, the people said. Reddit is considering a possible listing as soon as March, the people said.
Separately, private trades of Reddit's unlisted shares have valued the company below $5 billion. Potential buyers on Rainmaker Securities' platform have submitted bids indicating a value of between $4.5 billion and $4.8 billion. Forge Global Holdings Inc.'s database shows a derived price based on secondary activity implying a $4.8 billion valuation. Such trades sometimes indicate a lower valuation than a company might achieve in an IPO, as private shares are relatively illiquid.
Deliberations around the IPO are ongoing and details such as the valuation target and timing are subject to change. A spokesperson for Reddit declined to comment.
The valuations under consideration demonstrate the extent of tech's retreat from the heady days of the private funding boom that peaked in 2021. Reddit raised funds that year at a $10 billion valuation, and could potentially have been valued as much as $15 billion in an IPO, Bloomberg News reported in 2022.
Instead, the market for first-time share sales froze, tech giants began rounds of layoffs and the companies that did go public were valued at less than where they raised money privately. Instacart, whose valuation peaked at $39 billion in March 2021, debuted in September 2023 at a $9.9 billion valuation. As of Friday, it has a market value of about $7.1 billion.
Read More: New Tech IPOs Could Burn Firms Who Bet on Established Startups
Reddit, founded in 2005, became an icon of the so-called meme-stock era after a forum on the site, WallStreetBets, jolted the stock market. The trading frenzy in 2021, driven largely by posts on the site, whipsawed the prices of GameStop Corp. and AMC Entertainment Holdings Inc.
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