The company, along with some of its existing investors, is targeting a sale of about 22 million shares, priced between $31 and $34 each, to raise up to $748 million.

The IPO, a major litmus test of investor appetite for new listings, will come more than two years after the company began preparations to go public. So far this year, the IPO market recovery has been uneven.

The targeted valuation, on a fully diluted basis, is less than the $10 billion Reddit was valued at after a fundraising in 2021.

After its launch in 2005, Reddit became one of the cornerstones of social media culture. Its iconic logo - featuring an alien with an orange background - is one of the most recognized symbols on the internet.

Its 100,000 online forums, dubbed "subreddits", allow conversations on topics ranging from "the sublime to the ridiculous, the trivial to the existential, the comic to the serious", according to co-founder Steve Huffman.

Huffman himself turned to one of the subreddits for help to quit drinking, he wrote in his letter. Former U.S. President Barack Obama also did an "AMA" ("ask me anything"), internet lingo for an interview, with the site's users in 2012.

The company's influential communities are best known for the "meme-stock" saga of 2021, when several retail investors collaborated on Reddit's "wallstreetbets" forum to buy shares of highly shorted companies such as video game retailer GameStop (GME.N).

The episode torpedoed hedge funds that had bet against those stocks, and made retail traders a force to reckon with. It was also featured in a 2023 film starring Seth Rogen.

To tap into the retail base, Reddit has reserved 8% of the total shares on offer for eligible users and moderators on its platform, certain board members and friends and family members of its employees and directors.

Such buyers will not be under a lock-up period and could choose to sell their shares on the first day of trading, potentially increasing the price volatility.

"This is a unique IPO and what happens with it is going to be partly driven by the buzz on the platform," said Reena Aggarwal, director of the Georgetown University Psaros Center for Financial Markets and Policy.

Morgan Stanley, Goldman Sachs, J.P.Morgan and Bank of America Securities are the lead underwriters for the offering. Reddit expects to list on the New York Stock Exchange under "RDDT."

LIMITED COMMERCIAL SUCCESS

Despite its cult-like status among followers, Reddit has lagged the success of contemporaries such as Meta Platforms' Facebook (META.O) and Twitter, now known as X.

The company has never turned a profit, and said in its filing earlier that it was "in the early stages of monetizing (its) business".

Reddit had an average of 73.1 million daily active "uniques" - users who use its platform at least once a day - in the three months ended Dec. 31, 2023, it said.

The company's approach to content moderation has also been a sticking point with advertisers.

It relies on volunteers from its user base to moderate the content posted on its forums. Moderators can decide to withdraw from their duty at any time, like during 2023, when several quit in protest over the company's decision to charge third-party app developers for access to its data.

"There's no question that as a public company, Reddit is going to be under much more scrutiny in terms of their platform, what's being put out on the platform and how it's being monitored," Aggarwal said.

"Regulators and policymakers are quite concerned about these issues."