On Wednesday, Reddit priced its shares at $34 each, marking the top end of the expected range, indicating strong investor interest in its upcoming IPO on Thursday. The social media giant raised close to $500 million through this offering. Excluding employee stock options, the company, established 19 years ago, will initially be valued at $5.4 billion, significantly lower than its last private market valuation of $10 billion in August 2021, which was at the peak of the previous tech market surge.
This highly anticipated stock, set to debut on the New York Stock Exchange under the ticker symbol “RDDT,” is the most awaited offering of the year thus far. Should Reddit’s stock soar on its first day of trading, it’s likely that other venture capital-backed companies waiting in line will promptly initiate their IPO processes.
Astera Labs, a provider of connectivity hardware for data centers, surged 72% on its inaugural trading day on Wednesday, indicating a favorable climate for new entrants in the public markets.
Although profitable on an EBITDA basis, Instacart and Klaviyo, the key IPOs of 2023, received relatively tepid receptions on Wall Street last year.
However, Reddit continues to experience net losses exceeding $90 million, potentially casting a shadow over its stock performance amidst the growing emphasis on profitability for newly listed companies.
Investors might find Reddit’s involvement in the AI surge appealing. The company has started selling its data to Google for training AI models, and there are potential opportunities for similar licensing agreements in the pipeline. This could serve as a significant revenue growth avenue for the company. In January, Reddit sold contracts worth $203 million to AI firms for data access, as per a recent filing.
