Reddit Skyrockets 70% in NYSE Debut, Breaks Dry Spell for Tech IPOs

Popular social media platform Reddit made a historic debut on the New York Stock Exchange (NYSE) today, witnessing a staggering surge of up to 70% in its share price (via CNBC).

This marked a significant milestone as the first major social media company to undergo an initial public offering (IPO) since 2019, when Pinterest entered the market.

Priced at $34 per share, Reddit’s IPO raised eyebrows by hitting the top end of the anticipated range. The company, along with selling shareholders, amassed approximately $750 million from the offering, with Reddit itself pocketing about $519 million.

Trading under the ticker symbol “RDDT,” Reddit’s stock opened at $47 and surged to a peak of $57.80. At its zenith, the company boasted a market capitalization of about $10.9 billion.

However, the initial fervor eventually cooled, with the share price settling at $48.64 approximately half an hour into trading, translating to a market cap of roughly $7.9 billion.

This IPO not only signifies Reddit’s foray into the public market but also serves as a litmus test for investor appetite for new tech stocks amidst a dry spell for IPOs.

The tech sector witnessed a lull since the technology boom’s peak in late 2021, with few venture-backed tech companies going public. Those that did, such as Instacart and Klaviyo last year, failed to impress.

Reddit’s financials revealed a mixed bag: while its annual sales for 2023 climbed by 20% to $804 million, it still recorded a net loss of $90.8 million for the same period. Nonetheless, the company’s potential is underscored by its ambitious plans for revenue diversification.

In a bid to strengthen its AI capabilities, Reddit recently expanded its partnership with Google, allowing the tech giant more access to Reddit’s data for training AI models and enhancing its products.

Founded in 2005 by Alexis Ohanian and Steve Huffman, Reddit has garnered attention not only for its IPO but also for its unique approach to involving its user base, known as Redditors, in the offering through a directed-share program.