NEW YORK (AFP) – Shares of social media company Reddit soared nearly 50 per cent on the New York Stock Exchange Thursday in a buoyant market debut that raised hopes about the IPO market.
The company, which trades under the ticker RDDT, finished at USD50.44, up 48.4 per cent from its initial public offering price, lifting the valuation to around USD8 billion.
The hot trading debut came after the company’s IPO priced at the upper end of the range, raising a bit more than USD500 million.
Market watchers were not sure what to expect from Thursday’s start given Reddit’s record of annual losses and scepticism about potential growth in advertising revenues – which the company has described as a key area of promise.
A few hours before the first trade, Chief Executive Steve Huffman told CNBC that Reddit was seeing “a lot of momentum” in the advertising market.
“What’s special about Reddit is whatever you’re into, whatever you’re going through,” whether applying to school or going through romantic or health trouble, “it’s all on Reddit,” he said.
He added: “There’s really no constraint on how big the ads business can be.”
The social media company has also expressed confidence about growth from monetizing user data and greater international usage.
Thursday’s trading performance suggested such arguments found resonance, at least initially, despite lingering questions about the company with a record of financial losses.
IPO slump
The entry of Reddit comes on the heels of a big slowdown in tech IPOs since the US Federal Reserve started hiking interest rates.
With easy financing scarce, Silicon Valley has seen a dearth of businesses ready to make the leap to go public, with Pinterest being the last social media company to do so in 2019.
San Francisco-based Reddit first filed for IPO in 2021 when the market was hot thanks to a Covid-linked growth boom for tech. But the attempt stalled as the internet economy cooled.
Reddit – unlike Facebook or X, formerly Twitter – is siloed into about 100,000 subject-focused chatrooms known as subreddits, making it more specialised and a place where posts are less prone to going viral.
Even so, Reddit has 73 million average daily users and 267 million monthly users, mainly in the United States, according to its filing to US regulators.
Content in subreddits is mostly moderated independently, with the site demanding a basic standard that users must adhere to, making it less policed or centralised than Facebook or TikTok.
Following the lead of companies like Airbnb and Rivian, Reddit set aside about eight per cent of the IPO shares for moderators and top users, known as “Redditors.”
