“Reddit Valued at $5 Billion: A Sensible Assessment”

With governments tightening the screws on Big Tech companies trying to buy smaller firms, a key exit avenue could be closed to startups in the near term. That fact makes Reddit feeling out its own IPO valuation all the more important. What could help tech companies avoid another 2023 (a year that had precious few public debuts) is a massive, winning public offering. Too high, and the stock could lose ground from its IPO price. But private tech companies want good IPO news that sticks, and public market investors won’t gain confidence if Reddit clears a bar that it set too low.

The potential failure of Amazon’s planned acquisition of iRobot serves as a stark reminder of the crucial role the IPO market plays in today’s business landscape. As governments continue to tighten their grip on Big Tech companies attempting to purchase smaller ones, it’s become increasingly apparent that startups may have limited options for achieving liquidity in the immediate future.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

If mergers and acquisitions become more difficult to execute, especially for Big Tech companies that often opt to buy innovative technology rather than develop it in-house, late-stage startups and unicorns could find themselves with few viable routes to financial success beyond going public. This is why Reddit’s potential for an IPO has garnered so much attention. A successful public offering could have a ripple effect, paving the way for other tech companies to follow suit with their own IPOs.

However, in order for Reddit to achieve this, the company must carefully consider its pricing strategy. If the IPO is priced too low, any positive trading outcomes may be deemed artificially inflated rather than driven by tangible value. On the other hand, if the stock is priced too high, Reddit may see a dip in performance following its IPO, which could discourage other companies from pursuing their own public offerings. Last year, we witnessed the impact of post-IPO trading performance on companies’ decisions, such as when Instacart’s stock dropped below its IPO price of $30 per share, causing other tech companies to take note. Today, Instacart’s value stands at just over $25 per share.

Avatar photo
Dylan Williams

Dylan Williams is a multimedia storyteller with a background in video production and graphic design. He has a knack for finding and sharing unique and visually striking stories from around the world.

Articles: 874

Leave a Reply

Your email address will not be published. Required fields are marked *