Reddit soars in debut
Shares at one point up more than 40%
NEW YORK >> Reddit soared in its Wall Street debut as investors pushed the value of the company close to $9 billion seconds after it began trading on the New York Stock Exchange.
Reddit, which priced its IPO at $34 a share, debuted Thursday afternoon at $47 a share. The going price soon climbed even higher, but still oscillated some. As of around 2:30 p.m. ET, shares for the self-anointed “front page of the internet” were up more than 40%.
The IPO will test the quirky company’s ability to overcome a nearly 20-year history colored by uninterrupted losses, management turmoil and user backlashes to build a sustainable business.
Reddit’s high open on the public market was no surprise to some industry experts.
“The supply is pretty limited and there’s strong demand, so my sense is that this is going to be a hot IPO,” Reena Aggarwal, director of Georgetown University’s Psaros Center for Financial Markets and Policy, said ahead of Reddit’s trading Thursday — while also pointing to bullish market conditions overall.
Still, she also anticipated Reddit’s IPO to be volatile. Even with a sizeable “pop” right out of the gate, it’s possible that some might sell their shares to reap gains soon after — potentially causing prices to drift.
The interest surrounding Reddit stems largely from a large audience that religiously visits the service to discuss a potpourri of subjects that range from silly memes to existential worries, as well as get recommendations from like-minded people.
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.
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.
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.