Reddit shares rise 30% to start week after social media company’s IPO
Reddit CEO Steve Huffman hugs mascot Snoo as Reddit begins trading on the New York Stock Exchange (NYSE) in New York on March 21, 2024.
Timothy A. Clary | AFP | Getty Images
Reddit shares jumped 30% on Monday, as investors continued snapping up the stock following last week’s IPO.
The shares, which debuted at $34 on Thursday, closed at $59.80. Reddit and existing investors raised roughly $750 million combined in the offering.
Reddit shares soared 48% on their first day of trading on New York Stock Exchange. A number of moderators and users, known as Redditors, earning millions of dollars as a group. Along with their friends and family members, they were able to partake in Reddit’s IPO via a directed-share program, a model previously employed by Airbnb, Rivian and Doximity.
OpenAI CEO Sam Altman, an early Reddit investor and former board member, saw his stake in the company grow from $200 million to over $613 million after the debut.
Reddit’s IPO came the same week that data center hardware vendor Astera Labs skyrocketed 72% in their opening day on the Nasdaq. Reddit was the first major social media company to go public since Pinterest’s offering in 2019, and investors were monitoring its performance to gauge whether the IPO market might pick up after a long lull due to rising interest rates and inflationary concerns starting in 2022.
Plexo Capital founding managing partner and Reddit shareholder, Lo Toney, told CNBC that Reddit’s debut was “a positive sign not only for Reddit, but I think also the tech industry and what it might mean for future IPOs.”
“One thing we know with certainty is that there [was] a lot of investor appetite during the roadshow for Reddit, and we see that it’s continuing to hold up well,” Toney said. “Clearly the market is signaling there’s an appetite for more companies to come to the public markets.”
Still, Toney said there are other “dynamics that need to happen,” including a few more companies entering the public market before it’s safe to say that the floodgates have opened. Toney noted that some startups have raised a lot of money so they may not be in any hurry to go public and raise more cash.
“At the same time there are instances where the last private market financing may be higher than what the public market will accept as a public company valuation,” Toney said.
Reddit had a private market valuation of $10 billion in 2021 when it last raised a funding round, according to deal-tracking service Pitchbook, and was valued at roughly $6.5 billion based on its IPO price of $34 per share.
