April 17, 2024

Brighton Journal

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Shares of Reddit rose 30% to start the week following the social media company's IPO

Shares of Reddit rose 30% to start the week following the social media company's IPO

Reddit shares soared 48% when they began trading on the New York Stock Exchange under the stock ticker “RDDT,” resulting in a number of moderators and users, known as Redditors, earning millions of dollars as a group. These Redditers, along with company insiders and their friends and family members, were able to participate in Reddit's IPO via a directed participation program, similar to similar offerings offered by tech companies like Airbnb, Rivian, and Doximity.

OpenAI CEO Sam Altman, who was a Reddit investor and former board member, saw his stake in the company increase from $200 million to more than $613 million through the IPO.

Reddit's IPO came the same week that Astera Labs shares rose 72% on the day the data center hardware company made its public market debut on the Nasdaq. Reddit was the first major social media company to go public since Pinterest went public in 2019, and investors have been watching its stock debut to gauge whether the IPO market might rebound after a long lull due to factors such as rising inflation, weak market responses to… Of the factors. 2023 debut and concerns about the broader global economy.

Lou Toney, founding managing partner of Plexo Capital and a Reddit contributor, told CNBC that Reddit's debut was “a positive sign for not only Reddit, but I think also the tech industry and what that might mean for future IPOs.”

“The only thing we know for sure is that there is [was] “There's a lot of investor appetite during the Reddit roadshow, and we see it continuing to hold up well,” Tony said. “Clearly the market is indicating that there is an appetite for more companies to come to the public markets.”

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However, Tony said there are “other dynamics that have to happen,” including a few more companies entering the public market before it is safe to say the IPO floodgates have opened. Tony noted that some startups have raised a lot of money, so they may not be in a rush to go public and raise more money.

“At the same time, there are instances where recent funding from the private market may be higher than what the public market will accept as the overall valuation for the company,” Tony said, adding that some startups with high private valuations may still have concerns about going public at a lower valuation. .

Reddit had a private market valuation of $10 billion in 2021 when it raised its last funding round, according to deal tracking service Pitchbook, valuing it at about $6.5 billion based on its IPO price of $34 per share.