Home US Reddit makes stock market debut in IPO – and shares SOAR as much as 70% as some Redditors complain site is selling out to Wall Street

Reddit makes stock market debut in IPO – and shares SOAR as much as 70% as some Redditors complain site is selling out to Wall Street

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A mascot bearing Reddit's recognizable logo rang the opening bell at the New York Stock Exchange Thursday morning.

Shares of Reddit jumped as much as 70 percent as the social media site made its highly anticipated stock market debut.

The 19-year-old company, which hosts thousands of online communities, priced its IPO Wednesday at $34 per share.

When the shares began trading on the New York Stock Exchange, they immediately jumped to $47 and reached $57.80 – before ending the session up 48 percent at $50.44 per share.

Unusually, Reddit reserved 8% of the shares for users and moderators of its website – around 75,000 people had the opportunity to buy shares.

If they had purchased, say, $1,000 worth, they could have made a profit of up to $700. But user comments on the site suggest many of them disapproved of the offer.

A mascot bearing Reddit's recognizable logo rang the opening bell at the New York Stock Exchange Thursday morning.

A mascot bearing Reddit’s recognizable logo rang the opening bell at the New York Stock Exchange Thursday morning.

As Reddit’s stock value soared to nearly $9 billion in its Wall Street debut, commentators on the social media site’s biggest stock trading forums expressed skepticism about the prospects for the company’s stock. loss-making company.

“Where can I buy puts?” asked user savage011, among the most popular comments on Reddit’s Wall Street Bets forum, which has more than 15 million users.

Buying put options gives traders the opportunity to make money if the stock price falls – much like shorting a company.

CEO and co-founder Steve Huffman visited Wall Street this morning, where the recognizable Reddit logo mascot rang the opening bell.

Some so-called “Redditors” have complained that the San Francisco-based company is selling out to Wall Street by going public.

The company is famous for the “meme stocks” saga of 2021, where Reddit users drove up the prices of heavily shorted companies, driving away investors betting against them. Many saw it as a victory for the “little guy” over the giants of Wall Street.

Reddit’s stock market debut – under the symbol “RDDT” – has been planned for more than two years. It confidentially filed for an IPO in late 2021, but was delayed due to rising interest rates and falling stock markets in 2022.

The IPO will test the company’s ability to overcome a history marked by losses, management turmoil and occasional backlash from users to build a sustainable business.

Reddit was started in 2005 by Huffman and Alexis Ohanian as a place where users could freely submit content, whether photos, videos, memes, serious advice, or random observations.

These are then “upvoted” or “downvoted” by other users.

Over the years, the site has grown to one with more than 70 million daily unique visitors and devoted fans who visit its 100,000 communities called “subreddits” to discuss an endless array of eclectic topics.

CEO and co-founder Steve Huffman (pictured, middle) visited Wall Street on Thursday morning.

CEO and co-founder Steve Huffman (pictured, middle) visited Wall Street on Thursday morning.

CEO and co-founder Steve Huffman (pictured, middle) visited Wall Street on Thursday morning.

The company’s debut also sets the stage for other companies looking to go public this year, while testing investors’ appetite for new areas.

This is the first time a major social media company has gone public since Pinterest’s debut in 2019.

Besides its original content, Reddit is also famous for the “meme stock” saga of 2021.

That’s when a group of retail investors on the “Wall Street Bets” subreddit collaborated to buy shares of heavily shorted companies like GameStop and AMC.

In a nod to Redditors, the company has reserved 8% of the shares on offer for eligible users and moderators, certain board members, and friends and family members of its employees and directors.

1711057889 93 Reddit makes stock market debut in IPO and shares

1711057889 93 Reddit makes stock market debut in IPO and shares

Some so-called “Redditors” had complained that the San Francisco-based company was selling out to Wall Street by going public (Photo: New York Stock Exchange Thursday)

Pedestrians walk past a GameStop store on 14th Street in Union Square in Manhattan on January 28. The GameStop saga has been described by some as a victory for the little guy over the giants of Wall Street.

Pedestrians walk past a GameStop store on 14th Street in Union Square in Manhattan on January 28. The GameStop saga has been described by some as a victory for the little guy over the giants of Wall Street.

Pedestrians walk past a GameStop store on 14th Street in Union Square in Manhattan on January 28. The GameStop saga has been described by some as a victory for the little guy over the giants of Wall Street.

But analysts warned it was a risky move that lends itself to volatility.

Typically excluded from auctions during an IPO, retail traders wanting exposure to a newly listed company only buy shares when they begin trading, which can result in an initial bullish day and then a decrease.

“Because there is such a rabid community around it, Reddit users, you could see Reddit itself ironically becoming a meme stock like you saw happen with AMC and GameStop,” Kamran said Ansari, Headline partner. Yahoo finance.

But the frenzy for tech stocks could help Reddit get off to a good start, said Josh White, an assistant professor of finance at Vanderbilt University.

“We don’t get a lot of high-profile IPOs in the tech sector. Those tend to be very popular because it’s hard to buy that kind of growth,” he said.

But despite its cult status in the social media world, the company has failed to replicate the success of rivals Meta and X.

The company said it was “in the early stages of monetizing (its) business” and had yet to turn an annual profit.

Investors will analyze whether there is a path to profitability.

“The real news will be after the first conference call on the results: where are they going, what do the results look like, what changes will they bring,” Reena Aggarwal, director of the Psaros Center for Financial Markets and Banking Policy Georgetown University. , told Reuters.

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