Reddit priced its initial public offering at $34 per share, the upper end of its expected range, valuing the social media platform at roughly $6.4 billion.
The corporate’s debut on the Recent York Stock exchange on Thursday has been highly anticipated given the lull in public listings over the past two years. Reddit is the primary major social media company to go public since Pinterest (PINS) in 2019.
The user generated discussion-style platform has been around since 2005, nevertheless it gained increased recognition throughout the meme frenzy in 2021. At the moment retail traders on subreddit Wall Street Bets encouraged short squeezes on shares of video game retailer GameStop (GME), theater chain (AMC), and other heavily shorted stocks.
The IPO is anticipated to gauge investors’ appetite for tech related offerings at a time when monetary policy is tight.
Reddit’s revenue in 2023 jumped about 20% year-over-year to $804 million, in line with the corporate’s S-1 filing. About 98% of sales within the third quarter of last yr were generated from promoting on the platform.
The corporate just isn’t profitable, with its net loss narrowing from $158.6 million in 2022 to $90.8 million last yr.
The location had 500 million visitors in 2023 with a mean of 73.1 million day by day energetic uniques throughout the three months ending in December.
Reddit noted its “content is especially necessary” for artificial intelligence, or AI, in line with its S-1 filing.
“We’re exploring business opportunities in licensing data for purposes including machine learning, business evaluation, display and training generative AI models,” reads the filing.
Headline enterprise partner Kamran Ansar says he sees AI more applicable to the location’s content moderation.
“I believe, obviously, today, it’s de jure — you may have to say AI and what you are doing with it. I believe it might help probably with curation,” Ansari told Yahoo Finance.
“And certainly one of the things that is all the time been somewhat spicier with Reddit is the content will be not quite as advertiser friendly,” he said.
In a nod to Redditors, the corporate put aside 1.76 million shares on the market to eligible users and moderators on the platform, with no lock-up period.
The move lends itself to volatility, says Headline’s Ansari.
“You could see a giant run up within the stock price and a drop,” he said. “Because this has such a rabid community around it, the Reddit users, you possibly can see Reddit itself mockingly develop into a meme stock the best way that you just saw occur with like AMC and GameStop.”
Ines is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre