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S-1 filings and IPOs

The registration statement behind an IPO, what's inside it, and how the numbers come together, with Reddit's 2024 prospectus.

From first filing to first trade

1. Form S-1. The company files its registration statement. Many companies first submit a draft confidentially; the public S-1 has to be on EDGAR at least 15 days before the roadshow starts.
2. SEC comments and S-1/A amendments. The SEC staff reviews the filing and sends comment letters; the company answers by filing amendments. A later amendment adds the expected price range.
3. Roadshow and pricing. The underwriters market the shares to investors, then the company and underwriters agree the final price, usually the evening before trading.
4. Final prospectus (424B4). The prospectus with the final price, share count and underwriting discount is filed under Rule 424(b)(4).
5. First trade and closing. The shares start trading on the exchange, and the deal closes a business day or two later.

An example: Reddit's IPO

Reddit filed its Form S-1 on Feb 22, 2024, followed by three amendments in March. The final prospectus, filed on Mar 21, 2024, sets the numbers:

• Shares: 22,000,000 shares of Class A common stock, 15,276,527 sold by Reddit and 6,723,473 by existing shareholders.
• Price: $34.00 a share, for $748,000,000 in total.
• Underwriting discount: $1.70 a share, or 5% of the price, kept by the banks.
• Proceeds: about $493.4 million to Reddit before expenses. The money from the 6,723,473 shares sold by existing holders went to them, not to the company.
• Voting: each Class B share carries 10 votes and each Class A share one, so the pre-IPO holders kept most of the voting power. Share classes explains how that works.

The prospectus also describes a lock-up: insiders and most pre-IPO holders agreed not to sell until the earlier of 180 days after the prospectus or a set date after a quarterly earnings release. When a lock-up ends, those holders can sell under Rule 144.

What's inside an S-1

• Prospectus summary and risk factors: the business in brief and what could go wrong, written much like a 10-K's risk factors.
• Use of proceeds: what the company plans to do with the money.
• Dilution: how much less book value per share new buyers get than the price they pay.
• MD&A and financial statements: usually two or three years of audited results, the same sections as a 10-K.
• Principal and selling stockholders: who owns how much before and after the offering.
• Underwriting: the banks, their discount and their option to buy extra shares.

Smaller companies, broadly those with under about $1.2 billion of annual revenue, can qualify as an “emerging growth company”, which allows a shorter financial history and lighter disclosure for a few years. Reddit's prospectus says it is one.

More in Learn and Tools · Methodology & Disclosures explains where every number comes from.