This month, Reddit is poised to reach the stock market in one of the first tech initial public offerings of the year. Unlike a recent crop of start-ups that are focused entirely on artificial intelligence, the 19-year-old company is a throwback to an earlier era of social media. It is also trying to go public at a time when investors have been skeptical of tech offerings. (Reuters) – Social media platform Reddit’s shares ended their first day of trading in New York up 48%, signaling that investor appetite for initial public offerings of promising yet loss-making companies could be returning.
Reddit outlined a strategy in its filing calling for even more ad sales on a service that it believes companies will be a powerful marketing magnet because so many people search for product recommendations there. Other early investors in Reddit have included PayPal co-founder Peter Thiel, Academy Award-winning actor how to turn off safeprice Jared Leto and rapper Snoop Dogg. None of them are listed among Reddit’s largest shareholders heading into the IPO. The IPO will test the quirky company’s ability to overcome a nearly 20-year history colored by uninterrupted losses, management turmoil and occasional user backlashes to build a sustainable business.
About 98% of sales in the third quarter of last year were generated from advertising on the platform. The stock closed at $50.44 on Thursday, up 48% from the IPO price and giving the company a market cap just north of $8 billion. Huffman himself turned to one of the subreddits for help to quit drinking, he wrote in his letter.
- Over the years, the company struggled through many of the issues facing the largest social media firms, such as how to moderate speech and make money.
- Its 100,000 online forums, dubbed „subreddits,“ allow conversations on topics ranging from „the sublime to the ridiculous, the trivial to the existential, the comic to the serious“, according to co-founder and CEO Steve Huffman.
- Reddit has never profited from its broad reach while piling up cumulative losses of $717 million.
- Since Thursday just marks Reddit’s first day on the public market, Aggarwal stresses that the first key measure of success will boil down to the company’s next earnings call.
But despite its cult-like status in the social media world, the company has failed to replicate the success of its bigger rivals Meta Platforms’ Facebook and Elon Musk’s X. Its 100,000 online forums, dubbed „subreddits,“ allow conversations on topics ranging from „the sublime to the ridiculous, the trivial to the existential, the comic to the https://www.forexbox.info/trend-envelopes-indicator/ serious“, according to co-founder and CEO Steve Huffman. After its launch in 2005, Reddit became one of the cornerstones of social media culture. Its iconic logo – featuring an alien with an orange background – is one of the most recognized symbols on the internet. Mr. Huffman, who was working on a travel site, was not eager to come back.
Reddit jumps 70% in highly anticipated public-trading debut
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. Stocktwits.com, the social media firm that analyses posts and message volumes on its platform related to a company’s ticker symbol, showed retail sentiment for Reddit was „extremely bullish.“ Reddit’s popularity rose to new heights during the „meme-stock“ saga of 2021 in which a group of retail investors collaborated on its forum „wallstreetbets“ to buy shares of highly shorted companies like GameStop. The IPO valued Reddit at $6.4 billion, and the company and its selling shareholders raised $748 million.
Reddit was valued at $10 billion in a private fundraising round in 2021, and the strong stock market reception indicated that the company may not have needed to curb its valuation expectations so much to get the IPO off the ground. With few large tech IPOs in recent years, the frenzy for technology stocks is likely to help Reddit get a good start on the market, experts say. But investors will be watching the market closely over the next few weeks, said Julian Klymochko, CEO of alternative investment solutions firm Accelerate Financial Technologies. The IPO was also expected to gauge investors’ appetite for tech-related offerings at a time when monetary policy is tight.
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The company also is hoping to bring in more money by licensing access to its content in deals similar to the $60 million that Google recently struck to help train its artificial intelligence models. Not long after it was born, Reddit was sold to magazine publisher Conde Nast for $10 million in deal that meant the company didn’t need to run as a standalone business. Even after Conde Nast parent Advance Magazine Publishers spun off Reddit in 2011, the company said in its IPO filing that it didn’t begin to focus on generating revenue until 2018.
Reddit’s ownership was also complicated, and its technology was lagging behind competitors. Huffman, 40, is now CEO, but how he got the job serves as a reminder of how messy things can get at Reddit. The change in command occurred in 2015 after Ellen Pao resigned as CEO amid a nasty user backlash to the banning of several communities and the firing of Reddit’s talent director. Even though Ohanian said he was primarily responsible for the firing and the bans, Pao was hit with most of the vitriol. In the recent documents filed for its revived IPO, Reddit attributed the losses to a fairly recent focus on finding new ways to boost revenue. As expected for an IPO of this kind, the Reddit’s market kickoff was delayed past the opening bell Thursday.
Former U.S. President Barack Obama also did an „AMA“ („ask me anything“), internet lingo for an interview, with the site’s users in 2012. While Reddit still relies on advertising for the vast majority of its revenue, it touted AI in its IPO marketing roadshow as an area of growth. Reddit, which has not turned an annual profit since launching in 2005, lured investors by positioning its content as training grounds for artificial intelligence (AI) programs.
Reuters reported last month that Reddit struck a data licensing deal with Google worth about $60 million a year. Barack Obama, the former US president, also did an “AMA” (“ask me anything”), internet lingo for an interview, with the site’s users in 2012. Reddit participated in the first class of the influential Y Combinator startup accelerator program shortly after its founding in 2005.
Reddit’s robust entry on to the market stands to generate a windfall for its largest shareholder, Advance Publications. The parent company of Condé Nast, which owns popular magazines such as the New Yorker, Vogue and Wired is set to reap as much as $1.4bn from the debut. Those efforts, mostly centered around selling ads, have helped the social platform increase its annual revenue from $229 million https://www.day-trading.info/how-to-invest-in-cannabis-stocks-right-now/ in 2020 to $804 million last year. But the San Francisco-based company also posted combined losses of $436 million from 2020 through 2023. Reddit has never profited from its broad reach while piling up cumulative losses of $717 million. That number has swollen from cumulative losses of $467 million in December 2021 when the company first filed papers to go public before aborting that attempt.
Reddit shares soar on first day of public trading
Social media platform Reddit’s (RDDT.N) shares ended their first day of trading in New York up 48%, signaling that investor appetite for initial public offerings of promising yet loss-making companies could be returning. Reddit shares rose 48 percent on Thursday in their first day of trading, in a sign of investor eagerness that set the stage for more tech companies to reach the stock market this year. The social media company’s debut on the New York Stock Exchange was one of the first major tech initial public offerings of the year. Reddit shares closed 48% above initial offer prices in the company’s trading debut on Thursday, valuing the social media platform at more than $9bn in a closely watched opening. The stock peaked at $57.80 a share, up 70%, before dropping to $50.44 to close the day.
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Shares of Reddit soared as it made its highly anticipated public-trading debut on the New York Stock Exchange. Shares of the San Francisco-based company opened at $47 on the New York Stock Exchange on Thursday after pricing at $34 in the IPO, the top of the company’s indicated price range. „At the core we are a growth company. Achieving our mission means that we want to grow users and community,“ said Jen Wong, Chief Operations Officer at Reddit. The company has said it is “in the early stages of monetizing [its] business” and is yet to turn an annual profit. Analysts said investors would be scrutinizing its roadmap to profitability. Its 100,000 online forums, dubbed “subreddits”, allow conversations on topics ranging from “the sublime to the ridiculous, the trivial to the existential, the comic to the serious”, according to Huffman.