Reddit stock soars in highly anticipated market debut

Reddit’s filing also noted the company sees an opportunity to license its data for AI use. The site had 500 million monthly visitors in December 2023, the S-1 filing said, and an average of 73.1 million unique daily active users during the three months ending in December. “I think if we can keep doing that we’re in great shape,” Huffman told Yahoo Finance’s Brian Sozzi ahead of the listing on Thursday morning. “We have such high margins that if [we] just continue to sell and be mindful about costs, this company scales in a really impressive way.”

The IPO market froze soon after as the Federal Reserve embarked on its rate-hike campaign and sparked a difficult bear market for stocks that lasted throughout 2022. Last year was also mostly dormant for new offerings, with splashy names like Arm and Instacart failing to ignite a bigger wave of initial public offerings. Shares of the social media company began trading on the New York Stock Exchange at $47 after pricing at $34 on Wednesday in its initial public offering. The pop put Reddit’s market capitalization at about $9.5 billion, slightly below the $10 billion it was valued at in the private markets three years ago. Reddit (RDDT) stock soared on its first day of trading, ending the day up nearly 50% from its initial public offering price of $34 a share.

Per the usual IPO custom, the remaining shares are expected to be bought primarily by mutual funds and other institutional investors betting Reddit is ready for prime time in finance. The social network’s debut on the New York Stock Exchange had been highly anticipated, given the lull in public listings over the past two years. Reddit is the first major social media company to go public since Pinterest (PINS) in 2019. “I don’t know one company which really benefits from allocating shares to their users,” said Alan Vaksman, founding partner at investment firm Launchbay Capital. It confidentially filed for an IPO in December 2021, but a stock rout caused by Russia’s war in Ukraine and the Federal Reserve’s hiking of interest rates froze much of the IPO market and pushed it to delay.

Reddit co-founder and CEO Steve Huffman received a pay package worth $193m last year. The site’s other co-founder, Alexis Ohanian, long the public face of the company to Huffman’s background technical role, does not appear in the company’s filings with US financial regulators. After being early to social media, the San Francisco-based company stagnated for years. It faced questions and controversies for its freewheeling stance toward free speech. It struggled to build a viable business, and was initially resistant to advertising — until it wasn’t.

  1. Altman owns 12.2 million shares of Reddit stock, according to the company’s IPO disclosures.
  2. The social media company’s debut on the New York Stock Exchange was one of the first major tech initial public offerings of the year.
  3. Reddit participated in the first class of the influential Y Combinator startup accelerator program shortly after its founding in 2005.
  4. Its iconic logo – featuring an alien with an orange background – is one of the most recognized symbols on the internet.
  5. Company co-founders Steve Huffman and Alexis Ohanian — also the husband of tennis superstar Serena Williams — both left Reddit in 2009 while Conde Nast was still in control, only to return years later.

Such buyers are also not under a lock-up period and could choose to sell when the stock starts trading, potentially increasing the price volatility. Typically shut out of bidding in an IPO, retail traders eager to gain exposure to a newly-listed company buy shares only when they start trading. It also offered some shares to retail investors through online brokerage platforms Robinhood, SoFi Morgan Stanley Wealth Management and Fidelity Brokerage Services. As part of its plan to reward users, Reddit has reserved 8% of the shares on offer for eligible users and moderators, certain board members, as well as friends and family members of employees and directors. Josh White, assistant professor of finance at Vanderbilt University, said Reddit’s IPO showed investors were willing to ignore the company’s losses because of its potential growth – a trend not seen for at least three years. As part of its plan to reward its user base, Reddit has reserved 8% of the shares on offer for eligible users and moderators, certain board members, as well as friends and family members of its employees and directors.

About 98% of sales in the third quarter of last year were generated from advertising on the platform. The stock closed at $50.44 on Thursday, up 48% from the IPO price and giving the company a market cap just north of $8 billion. Huffman himself turned to one of the subreddits for help to quit drinking, he wrote in his letter.

Since Thursday just marks Reddit’s first day on the public market, Aggarwal stresses that the first key measure of success will boil down to the company’s next earnings call. Still, she also anticipates Reddit’s IPO to be volatile—and, if there is an initial “pop,” it’s possible that some might sell their shares to reap their gains soon after, potentially causing prices to drift. Reddit and its eclectic bazaar of online communities is ready to plumb high-stakes territory—the stock market. Reddit’s latest S-1 filing showed that its revenue surged 20% year over year in 2023 to hit $804 million, with the majority of that coming from advertising on the site. The company remains unprofitable, however, and its net losses hit $90.8 million last year. Reddit’s revenue in 2023 jumped about 20% year over year to $804 million, according to the company’s S-1 filing.

Reddit is taking 20 years of posts and over $700 million of cumulative losses to Wall Street after pricing IPO at $34 per share

About 76 million users checked into one of Reddit’s roughly 100,000 communities in December, according to the regulatory disclosures required before the San Francisco company goes public. Reddit set aside up to 1.76 million of 15.3 million shares being offered in the IPO for users of its service., the social media firm that analyses posts and message volumes on its platform related to a company’s ticker symbol, showed retail sentiment for Reddit was “extremely bullish.” Reddit’s popularity rose to new heights during the “meme-stock” saga of 2021 in which a group of retail investors collaborated on its forum “wallstreetbets” to buy shares of highly shorted companies like GameStop. The IPO valued Reddit at $6.4 billion, and the company and its selling shareholders raised $748 million.

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Just over 100 companies went public in the United States last year, roughly a quarter of the number that went public in 2021, according to data compiled by Renaissance Capital, which manages I.P.O.-focused exchange traded funds. The listing is a milestone on a long road for Reddit, which was founded in 2005 in San Francisco. The site is best known for its message boards, where users can congregate on forums known as subreddits to research and discuss everything from parenting to power washing to Labrador retrievers. Over the years, the company struggled through many of the issues facing the largest social media firms, such as how to moderate speech and make money.

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The U.S. govt just unlocked an $8 trillion market to move in a new direction. “We don’t get many large tech IPOs. Those tend to be very popular because it’s hard to buy that kind of growth,” White said. Reddit also experienced tumultuous bouts of instability in leadership that may scare off prospective investors. Company co-founders Steve Huffman and Alexis Ohanian — also the husband of tennis superstar Serena Williams — both left Reddit in 2009 while Conde Nast was still in control, only to return years later. While trading had yet to begin by late morning, Reena Aggarwal, director of Georgetown University’s Psaros Center for Financial Markets and Policy, said she expects Reddit to open high.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM.

Ahead of its IPO, Reddit said it would allocate 8% of its 22 million shares to certain users and moderators, following a similar playbook to companies such as Robinhood and Airbnb, which let users in on their initial offerings. The move was met with disinterest by some of the platform’s users across the site’s top stock and investing subreddit. The initial public offering for the San Francisco-based company was first priced at $34 a share, putting its market value bollinger bands bulge and bollinger bands squeeze analysis at $6.4bn. The user-generated discussion-style platform has been around since 2005, but it gained increased recognition during the meme frenzy in 2021. At that time, retail traders on the subreddit WallStreetBets encouraged short squeezes on shares of video game retailer GameStop (GME), theater chain (AMC), and other heavily shorted stocks. By the tech industry’s standards, Reddit remains extraordinarily small for a company that has been around as long as it has.

At $34 per share, Reddit will have a market value of $6.4 billion — far below the more than $1.2 trillion of Meta Platforms, whose biggest social media service Facebook was started just 18 months earlier than Reddit. Reddit’s moneymaking potential also has attracted some prominent supporters, including OpenAI CEO Sam Altman, who accumulated a stake as an early investor that has made him one of the company’s biggest shareholders. Altman owns 12.2 million shares of Reddit stock, according to the company’s IPO disclosures. In a nod to Redditors, the company set aside 1.76 million shares for sale to eligible users and moderators on the platform with no lock-up period. Reddit’s performance signaled that the public markets have an appetite for more tech offerings after public listings fizzled amid rising interest rates and economic uncertainty.

After Mr. Huffman returned, the company’s revenues climbed to more than $800 million a year from $12 million, and its employees to 2,000 from 80. Last June, when he increased fees for independent developers who used Reddit’s data, many moderators on the site revolted by shutting down sections of the platform. And questions have swirled about the company’s role in spreading misinformation. During a leadership crisis in 2015, Reddit asked Steve Huffman, one of its founders, to return to run the social media platform. The site, a throwback to an earlier era of social media, is poised to go public as soon as next week.

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