Reddit Soars in Stock Market Debut

This article was last updated on March 22, 2024

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Reddit Emerges Victorious in Its Maiden Stock Market Appearance

Online forum platform, Reddit, dazzled in its debut at the exchange. Profiting from the prevalent buoyant sentiment, several stock market indices underwent considerable shifts today. Statements from the Federal Reserve (Fed), expressing positivity about imminent economic growth, created an environment ripe for Reddit’s success. The plan to reduce the standard interest rates thrice this year was also reiterated, further contributing to the market’s positive response. Reddit is fundamentally an amalgamation of large and small discussion boards, or ‘subreddits’, amounting to more than 100,000 entities. The wide range of forums facilitates targeted advertisement strategies, boosting the platform’s value.

Reddit Share Price Skyrockets at Launch

Initially priced at $34, Reddit’s shares were underpriced in comparison to the overwhelming interest observed upon trading commencement. The price eventually soared by several percentages closing at $50. Such an upsurge brought the market value to just over a staggering $8 billion. The share sale accumulated a total sum of $748 million. The company would receive around half a billion of this amount to invest in further developmental pursuits, while the remainder will be allocated to existing shareholders.

Major Stakeholders in Reddit

Reddit’s most significant shareholders encompass industry bigwigs like Sam Altman, the chairman of the renowned AI firm OpenAI, Chinese tech behemoth Tencent, and the parent corporation of US publisher Condé Nast. Condé Nast is known for purchasing Reddit for $10 million from its founders in 2006, emerging as the largest shareholder, before launching it independently. In a rare strategic move, Reddit offered its most frequent users an opportunity to purchase shares. As per the Chief Financial Officer’s statement to news site Axios, “tens of thousands” of Reddit users embraced this unique opportunity. The initiative serves as a method to maintain retain a strong user-base, critical for the platform’s comprehensive growth. However, the experts in stock market analytics whom NOS consulted this week are observing Reddit’s Initial Public Offering (IPO) with scrupulous attention. Primarily because the company, established in 2005, hasn’t started making profits yet. On the brighter side, Reddit’s revenue is escalating, reaching up to €740 million the previous year, and the losses are simultaneously dwindling. Reddit’s income primarily relied on advertisement revenue, a field predominantly overshadowed by Meta and Google.