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Reddit should go public at $5B, according to secondary data

If secondary buyers aren't buying shares at more than a $5 billion valuation, it wouldn't be wise for Reddit to price its IPO above that.

Investors who buy at the IPO want upside on their investment, so Reddit has to price itself at the sweet spot where shares don’t look undervalued but also have room to ascend. Javier Avalos, co-founder and CEO of Capilight, a secondary data tracking platform, said that going out at $5 billion would be a realistic price based on the company’s $800 million yearly revenue, as reported in its S-1 filing. He added that a $5 billion valuation would equate to a mid-single-digit revenue multiple, which is realistic for both today’s public market and what other companies in Reddit’s category tend to trade around.

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