Reddit is set to make its public debut this week, and according to Tom Sosnoff, CEO at brokerage firm TastyLive, the social media platform may have a unique opportunity on Wall Street. In an interview on CNBC’s “Squawk Box,” Sosnoff highlighted Reddit’s potential to fill a niche in the market for investors looking to capitalize on the growth of social media.
Sosnoff believes that Reddit will be an intriguing investment option for many, as it will likely be the only pure social media app available for trading. The company’s IPO is scheduled to be priced on Wednesday, with trading set to commence on Thursday. Reddit anticipates the stock to be valued between $31 and $34 per trade, resulting in a capital raise of about $750 million.
The landscape of social media investing has evolved significantly in recent years, with companies like Twitter, Facebook, Snap, and TikTok undergoing transformations or diversifying beyond just being social media platforms. Reddit, as a pure-play social media stock, could face challenges given its history of not turning a profit. Sosnoff, however, remains optimistic about Reddit’s future profitability once it becomes a public company, emphasizing the discipline that going public will bring to the company.
Sosnoff is already an investor in Reddit, having purchased equity in a private sale last year at a $5 billion valuation. As a pre-existing shareholder, he will be subject to a lock-up period following the company’s public offering. In addition to institutional investors and large funds participating in Reddit’s IPO, the company has also allowed some of its users to take part in the process. This move, however, may increase the stock’s volatility, as these users will not be subject to a lock-up period.
In conclusion, Reddit’s upcoming IPO presents an exciting opportunity for investors looking to tap into the social media market. While there are risks associated with investing in a company that has yet to turn a profit, the potential for growth and profitability post-IPO is a key factor driving interest in Reddit’s public debut.
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