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In a remarkable display of investor confidence, Reddit’s stock surged another 8.8% on Tuesday, defying a neutral rating from analysts and reaching $65.11 per share. This latest uptick marks a staggering 92% increase since the company’s highly anticipated initial public offering (IPO) last week, under the ticker symbol “RDDT.”
The Reddit IPO, which saw the social media platform priced at $47 per share, has captivated both Wall Street and Main Street alike, with shares trading at nearly double their debut value. A total of 22 million shares were sold in the offering, generating close to $750 million in proceeds for Reddit and its existing shareholders.
Despite the resounding success of its public debut, analysts at New Street Research issued a neutral rating on Reddit stock, maintaining a $54 price target. Their cautious stance reflects concerns about potential volatility leading up to Reddit’s first earnings report, expected in May. Additionally, the Federal Trade Commission’s (FTC) inquiry into Reddit’s data licensing business has raised some eyebrows among investors.
However, optimism surrounding Reddit’s future remains palpable among shareholders, fueled in part by speculation of a lucrative data licensing deal with OpenAI, a leading AI research lab. Reddit’s expanded partnership with Google to provide access to more data for AI training has also bolstered confidence in the company’s revenue prospects.
While some Reddit users expressed regret over not buying more shares during the IPO, others celebrated the stock’s continued rally. Many investors believe that Reddit’s core business in online advertising, coupled with potential revenue streams from data licensing, positions the company for sustained growth in the evolving digital landscape.
As Reddit’s market capitalization swells to approximately $12.3 billion, the company’s executives, including CEO Steve Huffman, and notable stakeholders like OpenAI CEO Sam Altman, are poised to benefit significantly from the stock’s ascent. However, the lingering uncertainties surrounding the FTC inquiry underscore the need for Reddit to navigate potential regulatory challenges as it charts its course in the public markets.
With Reddit users actively engaging in discussions about the stock’s performance on the platform’s subreddits, the company’s IPO frenzy shows no signs of abating, underscoring the enduring allure of investing in one of the internet’s most influential communities. As the company gears up for its first earnings report, all eyes will be on Reddit as it navigates the next phase of its journey as a publicly traded entity.