Startup News: Reddit wants its most loyal users to share in IPO

More than two years after initially filing the paperwork to go public, Reddit is finally ready to take the plunge next month. And the social media network plans to reserve a portion of its shares for its most frequent users, known as “redditors.”

According to The Wall Street Journal, Reddit plans to set aside an as-yet-to-be-determined number of shares for 75,000 of the most loyal users of the social network, according to people close to the matter. “The users will have the opportunity to buy Reddit shares at its initial public offering price before the stock starts trading, a privilege normally reserved only for big investors,” the Journal wrote.

However, the Journal points out that there are obvious risks to allowing its users to get a piece of the action. Shares could fall from the IPO price in the days after the public listing, which might disappoint some of the company’s biggest fans.

Founded in 2005, San Francisco-based Reddit is a network of more than 100,000 communities that allows users to explore many hobbies and other interests, including investing in meme stocks. According to the Journal, the site has more than 70 million users on a typical day.

In December, Forge Global wrote that Reddit was one of five companies setting the stage for an IPO this year. As of December 31, 2023, Reddit’s Forge Price™ was $29.55, a 52% discount to its last funding round which implied a valuation of $4.8 billion at the time. Reddit’s Forge Price™ subsequently climbed to $39.57 as of February 28, 2024 which is up 34% YTD. In February, Reddit filed its latest S-1 with the SEC.

AI Chipmaker Astera Labs also plans to go public

Amid a bull market for U.S. stocks, other startups besides Reddit also are setting the stage for a public debut.

Last week, Astera Labs, which makes chip-based products used in data centers, filed with the SEC to raise up to $100 million in an IPO, according to Renaissance Capital, an IPO research firm. But Renaissance contends that the deal could end up raising five times that amount.

Founded in 2017, the Santa Clara, Calif.-based company is known for its so-called Intelligent Connectivity Platform for cloud and AI infrastructure. Renaissance also wrote that Astera plans to list on the Nasdaq, though no date has been selected for the IPO nor have pricing terms been disclosed. Investment banks Morgan Stanley, J.P. Morgan, Barclays, Deutsche Bank, Evercore ISI, and Jefferies are underwriting the deal.

Astera Labs generated $116 million in revenue for the calendar year 2023, and its losses narrowed during the year from the previous year, wrote Reuters in an article last week. The company’s last known valuation was $3.15 billion as of a November 2022 funding round. Astera Labs’ Forge Price™ was $21.20 as of February 28, 2024 which is up 38% YTD.

Another AI company, Groq, feels the need for speed

Given the nature of its business, it’s understandable that Groq is easily confused with Grok, the chatbot developed by Elon Musk’s artificial intelligence company, xAI. But last week, Groq took a huge step to stand apart from similarly-named Grok and other companies in the highly competitive generative AI industry.

Online trade news site CryptoSlate reported that Groq’s dedicated language processing unit has set a new record in processing efficiency for large language models. In a recent study conducted by research firm, Groq outperformed the other participants across several performance metrics, including total response time.

According to tech news site Gizmodo, "Groq claims to provide the world’s fastest large language models, and third-party tests are saying that claim might hold up."

Founded in 2016, Mountain View, Calif.-based Groq’s latest valuation on Forge is $1.08 billion as of an April 2021 funding round.

About the Author

John Kimelman is a veteran journalist who has worked at Barron’s and CNBC covering such topics as investing and commercial banking. Mr. Kimelman has received compensation from Forge Global, Inc. for authoring this article. Read more from John.

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