collapse of the amazon The proposed deal to acquire iRobot highlights just how important this year's IPO market is. A key outlet for startups could be closed in the short term as the government tightens its grip on Big Tech companies trying to buy smaller companies.
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If mergers and acquisitions become more difficult, especially for Big Tech companies that prefer to buy new technology rather than build it, unicorns and other late-stage startups will have less liquidity available than going public. Valuable avenues to sex will almost disappear. This fact makes it even more important for Reddit to know its own IPO valuation. Winning a major public offering could help tech companies avoid another 2023, one of the few years when public companies are at a premium.
To accomplish that, Reddit will have to price its services very carefully. If the price is too low, subsequent trades may be marked as more artificial than material, even if they yield positive results. If it's too high, the stock can lose value from its public price.
Image credits: Nigel Sussman (Opens in new window)
But private tech companies want memorable and good IPO news, and public market investors will lack confidence if they pass the bar set by Reddit too low. However, if the price is too high, companies may get scared if Reddit's performance cannot keep up after the IPO. Last year, we saw how much post-IPO trading performance can influence other companies' listing decisions — Instacart priced itself at $30 per share but failed to maintain profits. That's when other tech companies took notice. Currently, Instacart is valued at just over $25 per share.