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Reddit debuted on the New York Stock Exchange (NYSE) on Thursday at a pivotal moment for the technology sector, with its shares soaring 48% on its first day of trading. The anticipated initial public offering is the first by a social media company since Pinterest went public in 2019, allowing investors to enjoy digital platforms.
At a price of $34 per share, Reddit and its suppliers raised approximately $750 million from the IPO, $519 million of which was from the company itself. The stock opened at $47 and rose to $57.80 on the trading day before closing at $50.44, valuing the company at approximately $9.5 billion.
Reddit’s IPO, trading under the symbol “RDDT,” was seen as a litmus test for investors’ appetite for new tech products after a long crisis in building a publicly traded business. The company’s name complements the interest in the technology industry, with artificial intelligence (AI)-related businesses gaining major market share.
Reddit’s decision to go public comes at an important time in its history as the 19-year-old aims to capitalize on its large customer base and tableschat online. Despite facing financial scrutiny, Reddit reported sales of $804 million in 2023, up 20% from the previous year. Although the company has a loss of $90.8 million in 2023, this is a significant improvement from the loss of $158.6 million in 2022.
With a market value of $9.5 billion at the time of its IPO, Reddit has positioned itself as a strong company. A player in social media competing with big businesses like Meta (formerly Facebook), Articles (Google) and Pinterest. Additionally, as noted in its report, Reddit is still competing with platforms like X, Discord, Wikipedia, and Amazon’s Twitch streaming service.
Reddit is exploring licensing as a potential development opportunity to diversify revenue. It is planned to generate approximately $66.4 million in revenue this year from licensing changes. The company also has a partnership with Google, allowing the tech company to access Reddit data to improve its artificial intelligence and products.
Despite its successful IPO, Reddit still struggles with challenges such as regulatory oversight and unsafe users. The US Federal Trade Commission (FTC) recently launched a special investigation into Reddit’s licensing of intellectual property data, citing concerns about users’ privacy and data protection.
Reddit was founded in 2005 by Alexis Ohanian and Steve Huffman and attracted many followers. Major shareholders include OpenAI CEO Sam Altman, Tencent and Advance Magazine Publishers. Altman’s stake in the company is worth more than $400 million, underscoring Reddit’s importance as a leader in the digital space.
As Reddit begins its journey to becoming a public company, its leaders remain optimistic about the future of the platform and its ability to engage people and community usage. With the huge success of its IPO, Reddit is poised to create new opportunities in the world of social media and digital innovation.