"We Did It, Mom": Reddit Shares Soar As Much As 70% In NYSE Debut
Update (1347ET):
Reddit shares jumped as much as 70% in their debut on the New York Stock Exchange on Thursday afternoon.
The 19-year-old money-losing social media platform priced its initial public offering at $34 a share. Trading of RDDT began at 1315 ET, with shares opening up at $47 a share, or about 38% higher than its IPO price. Momentum kicked in shortly after and powered shares to the $57 handle.
Alexis Ohanian, who co-founded Reddit in 2005, posted on X: "We did it, mom."
We did it, mom. $RDDT IPO. pic.twitter.com/eF2Dnw87Ue
— Alexis Ohanian 🇦🇲 (@alexisohanian) March 21, 2024
Reddit is the first major social media company to go public since the 2019 IPO of Pinterest.
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Reddit, the community-focused message board site with tens of millions of daily users, priced its initial public offering on Wednesday between $31 to $34 per share, the top end of the range, raising $748 million.
Bloomberg reports shareholders sold 22 million shares at $34 a share, giving the money-losing company a fully diluted valuation of $6.4 billion. That's a substantial discount from the $10 billion valuation the company had in a 2021 funding round.
About 8% of total shares were set aside for qualified Reddit users and moderators on the platform, certain board members, and family and friends of employees and directors.
According to Reddit's filings, Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co., and Bank of America Corp. are leading the IPO. Reddit's shares will begin trading Thursday morning on the New York Stock Exchange under "RDDT."
Reddit's successful offering has occurred amidst a multi-year capital markets freeze that has crushed IPO activity. But there is hope the trend is reversing after semiconductor connectivity company Astera Labs debuted on the market on Wednesday, jumping 72% on its first trading day.
Reddit's IPO surpasses major listings last fall by US technology companies Instacart, which raised $660 million, and Klaviyo Inc., with a $659 million offering. 2023's biggest IPO was British chip designer Arm Holdings Plc's $5.23 billion offering.
So far this year, $8.7 billion has been raised through IPOs on US exchanges—an increase of about 150% compared with the same period last year.
Jason Draho, head of asset allocation Americas for UBS Global Wealth Management, told clients earlier this month that "falling rates, rising confidence in the economy, and record dry powder" could be the catalysts to revive not just merger and acquisition deals but also the IPO market.
Recall that Reddit signed a deal with Alphabet's Google, allowing Google's AI products to analyze Reddit data. So Reddit is now an AI company?
