The highly anticipated initial public offering of Reddit has finally happened, with the social media platform pricing its shares at $34 each, valuing the company at approximately $6.4 billion. This move marks Reddit as the first major social media company to go public since Pinterest in 2019.
Reddit, known for its user-generated discussion-style platform, has been around since 2005 but gained significant attention during the meme frenzy in 2021. Retail traders on the subreddit Wall Street Bets led short squeezes on stocks like GameStop and AMC, bringing Reddit into the spotlight.
The IPO is seen as a gauge of investors’ interest in tech-related offerings in a time when monetary policy is tight. Reddit’s revenue in 2023 saw a 20% year-over-year increase to $804 million, mostly generated from advertising on the platform. Despite this growth, the company is not profitable, with a net loss of $90.8 million in the previous year.
With 500 million visitors in 2023 and an average of 73.1 million daily active users, Reddit plays a unique role in the world of social media. The company stated in its S-1 filing that its content is essential for artificial intelligence, with plans to explore business opportunities in AI, including machine learning and AI model training.
In a nod to its loyal users, Reddit set aside 1.76 million shares for sale to eligible users and moderators with no lock-up period. This move could lead to volatility in the stock price, according to Headline’s venture partner Kamran Ansari, who believes Reddit could potentially become a meme stock like AMC and GameStop.
As the world watches how Reddit’s IPO performs on the New York Stock Exchange, it’s clear that this moment marks a significant milestone in the company’s journey. Stay tuned to see how Reddit’s stock price and market performance evolve in the coming weeks and months.
Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at this link: @ines_ferre.
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