Home Money Reddit Stock Surges on Its First Day of Trading

Reddit Stock Surges on Its First Day of Trading

by Elijah
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Reddit Stock Surges on Its First Day of Trading

A major concern ahead of the listing was that Reddit, the platform that gave birth to the meme stocks of 2021, could also suffer from the wild price swings caused by large numbers of investors coordinating their strategies through social media, including Reddit itself, on forums such as r/wallstreetbets.

Reddit’s IPO is a test of investor appetite for tech IPOs, which has been a rarity in recent years. Low interest rates had made it easy to raise and borrow cash in the private markets, and the economic fallout from the war in Ukraine and a collapsing stock market had made it too risky to dive into the stock market. “These aren’t quite the glory days of Facebook,” said Chris Beauchamp, chief market analyst at IG Group, adding that the company is still experiencing huge demand.

The last notable stock debut on social media was Pinterest’s in 2019. In a good sign for Reddit, which lost around $91 million last year, they are still trading around 80 percent above their IPO price despite the company remaining unprofitable. with loss. from almost $36 million last year.

Second exit

Reddit’s metamorphosis into a publicly traded company marks the second time it has ceased being a startup. Huffman and now estranged co-founder Alexis Ohanian founded Reddit in 2005, but sold it to publisher Condé Nast just over a year later in 2006. Advance Magazine Publishers, parent company of WIRED’s publisher Condé Nast, still holds up a 30 percent stake, a much larger stake than other major stakeholders, including Chinese tech giant Tencent and OpenAI CEO Sam Altman.

Since leaving Condé Nast, returning to startup mode in 2011, and welcoming Huffman in 2015, Reddit has grown steadily. On average, about 73 million users visited the service every day over the past quarter. The service is home to more than 100,000 communities covering news, entertainment and science topics. Power users, known as moderators or mods, create and manage these subreddits. Users post text, photos, and links to the forums, with votes and comments from fellow contributors helping determine what gets promoted in the community. A personalized news feed brings together content from the twenty or so communities that users follow on average.

Reddit’s challenge is to curb the unsavory aspects of that anything-goes culture. Hate speech has been common on the platform in the past, and millions of users still come just to view pornography. The decentralized structure gives mods incredible power, and they’ve used it to temporarily shut down their communities when they disagree with Reddit executives’ strategies — including a bitter battle last year.

Power users and employees have long wanted Reddit to improve the reliability of its platform and focus on core features, which the company has prioritized over the past year. But for a time, the company was busy with new projects, including live video broadcasts and a gambling prototype, that former employees said proved to be costly distractions.

The challenges of content moderation also never seem to get easier. In addition to the feature upgrades, Reddit needs to focus on ensuring its forums aren’t flooded with ChatGPT-generated spam that detracts from the real conversation users crave. Not to mention the continued crackdown on conspiracy theories, persistent hatred, and illegal sports, anime, and music streams.

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