It was certainly a daring undertaking to bring the “Front Page of the Internet” onto the stock exchange, but it worked: Reddit started trading on the New York Stock Exchange, and did so with great excitement. The share price shot up a whopping 48 percent on the first day of trading, and the starting price of RDDT shares of $34 quickly climbed to $50. This means that the social media platform with controversial content is now worth around $9 billion.
This means that Reddit is worth significantly less than Snapchat ($18 billion) or Pinterest ($23 billion), but it is ultimately well received on the stock market. The IPO raised an impressive $748 million, which can now be pumped into further building up the business. Because that has to get going first; Reddit is still making losses even 18 years after it was founded.
The IPO is probably very worthwhile for the existing shareholders. The New York media company Advance Publications, which publishes The New Yorker, Vanity Fair and GQ, among others, held around 30 percent of the shares before the IPO; and Chinese software giant Tencent (WeChat) had another 11 percent. In addition, according to the prospectus, OpenAI CEO Sam Altman (or companies affiliated with him) owned 8.7 percent.
Reddit: 6 unexpected facts about the IPO
Astera Labs also boomed on the stock market
The success of Reddit’s IPO is another positive signal for the tech industry regarding the stock market. In recent years there has been little for the industry on the stock exchange and there have been relatively few IPOs. Now a new IPO window seems to be opening. This week, Astera Labs, which specializes in AI chips, also completed its IPO, which was equally successful (Trending Topics reported).
IPOs are very important, especially from an investor’s perspective, because they can then make the large amount of money that they have invested in tech companies in recent years liquid on the stock market. The money then usually flows back to the fund investors (the so-called LPs), and they can then reallocate the money again. There is usually a good chance that they will put it back into the tech VCs’ funds and the cycle begins again.
Astera Labs: Strong IPO benefits from AI boom