Reddit’s IPO is coming, reportedly as soon as March, but it won’t be in the $15 billion valuation range, as Reddit had originally targeted.

Late last month, Business Insider reported that Reddit would be seeking a $15 billion valuation as part of its plans for its initial market offering, which, at the time, I noted was a crazy high price.

That’s based on the going market rates for social apps. X, at over 3x as many users as Reddit, and more than double its annual revenue, is currently valued at $19 billion, while Snapchat, which has more than 5x Reddit’s user base, is worth $27 billion, based on market estimates.

Given these comparisons, and the tough market conditions, it seems unrealistic to expect Reddit to be worth $15 billion.

And seemingly, Reddit’s initial research has found the same.

As reported by Bloomberg:

“Reddit 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.”

Reddit’s now reportedly targeting a valuation “in the mid-single-digit billions”. Which is more realistic, though even $5 billion could still be a high target number for the listing.

It’s a tough time for the tech sector, with many businesses cutting costs in order to maintain their margins, as development expenses continue to rise, and the broader market downturn reduces demand.

Reddit could, at least in theory, stand to benefit from more ad dollars flowing away from X, due to concerns about brand safety in that app, with Reddit’s evolving market offering now providing more direct pathways into its highly engaged, highly knowledgeable communities, which could help boost branding.

But at $800 million in annual ad revenue, it’s still a long way behind the other major players in the social media ad market. And while it does have potential, I’m not sure that there’s going to be significant demand to buy into the stock at this time.

Still, Reddit’s been working towards an IPO for years, and it got a $10 billion valuation as part of its last funding round in 2021.

It’d be disappointing for the company to have put in so much effort since then to accept a much lower mark than that. But if it wants to launch right now, that seems the most likely outcome.

The question then is: “What’s the future opportunity of the app?”

Reddit is adding users, rising from 52 million daily actives back in 2021 to 70 million today, but it’s not exactly growing at a rapid clip.

And with the platform implementing new restrictions on what can be shared in the app, in order to improve brand safety, it’s unclear if Reddit can see significant growth in its key markets, or if it’s already close to reaching its peak.

There is opportunity in Reddit ads, and more people are also using Reddit as a supplementary search platform, in order to gather more personal, real user insights into products before making a purchase. Reddit data is also fueling many generative AI models, so there are avenues that Reddit could theoretically capitalize on to boost its intake.

But it’s not a clear winner, on a clear winning path as yet.

We’ll learn more about the platform’s future growth plans as part of its IPO presentation.