April 21, 2024

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Reddit stock rises on expected market debut

Reddit stock rises on expected market debut

Reddit (RDDT) opened at $47 per share on Thursday after the social media platform priced its initial public offering at $34 per share. The stock rose nearly 60% to trade above $53 in its first minutes of trading as a public company.

The company's debut on the New York Stock Exchange was highly anticipated, given the lull in public listings over the past two years. Reddit is the first major social media company to go public since Pinterest (PINS) in 2019.

The user-generated discussion style platform has been around since 2005, but gained increased recognition during the meme craze of 2021. At the time, retail traders on Reddit's WallStreetBets subreddit encouraged a short squeeze in shares of video game retailer GameStop (GME). , theater chain (AMC), and other severely shorted stocks.

The IPO is expected to gauge investors' appetite for technology-related offerings at a time when monetary policy is tight.

Ukraine - 02/08/2021: In this illustration the Reddit logo appears on a mobile phone screen in front of the subreddit's WallStreetBets (WSB) logo as participants discuss stock and options trading.  (Image illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)

In this illustration, the Reddit logo appears on a mobile screen in front of the subreddit's WallStreetBets logo as participants discuss stock and options trading. (SOPA images via Getty Images)

Reddit's revenue in 2023 jumped about 20% year over year to $804 million, according to company estimates. File S-1. About 98% of sales in the third quarter of last year were generated from advertising on the platform.

The company's net loss narrowed from $158.6 million in 2022 to $90.8 million last year.

In an interview with Yahoo Finance, co-founder and CEO Steve Huffman noted that the company was profitable on an adjusted EBITDA basis in the second half of last year.

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“I think if we can continue to do that, we're in great shape,” Hoffman told Yahoo Finance's Brian Suozzi ahead of the listing Thursday morning. “We have such high profit margins that if… [we] Just keep selling and pay attention to costs, and this company will expand in a really impressive way.”

The site had 500 million monthly visitors in December 2023, and averaged 73.1 million unique daily active users during the three months ending in December, the S-1 filing said.

The Reddit profile also noted that the company sees an opportunity to license its data for AI use.

“On the data side, we have almost two decades of human conversations about anything and everything. In an AI world, where everything is increasingly written by AI, human-generated content becomes more valuable over time,” Hoffman said Thursday. “.

In a nod to Redditors, the company has allocated 1.76 million shares for sale to eligible users and moderators of the platform without a lock-in period.

The move creates volatility, Kamran Ansari, partner at Headline Project, told Yahoo Finance in a recent interview.

“You may see a big rise in the stock price and a fall,” he said. “Because this has a rabid community around it, Reddit users, you can see Reddit itself ironically becoming a stock of memes in the way you saw happen with AMC and GameStop.”

Ines is the chief business correspondent at Yahoo Finance. Follow her on X in @ines_ferre

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