Reddit shares rose 48% as trading began on the New York Stock Exchange under the ticker symbol “RDDT,” leading to a number of moderators and users, known as Redditors, making millions of dollars as a group. These Redditers, along with company insiders and their friends and family, were able to participate in Reddit's IPO through a directed share program, similar to similar offerings from tech companies like Airbnb, Rivian and Doximity.
OpenAI CEO Sam Altman, a Reddit investor and former board member, saw his stake in the company increase from $200 million to over $613 million as a result of the IPO.
Reddit's IPO came the same week that Astera Labs' shares shot up 72% on the day the data center hardware company made its Nasdaq debut. Reddit was the first major social media company to go public since Pinterest's offering in 2019, and investors watched the stock's debut to gauge whether the IPO market would recover after a long lull due to factors such as high inflation and poor market reactions to several factors could pick up debuts in 2023 and concerns about the overall global economy.
Lo Toney, founding managing director and Reddit shareholder at Plexo Capital, told CNBC that Reddit's debut is “a positive sign not only for Reddit, but I think for the tech industry and what this could mean for future IPOs.”
“One thing we know for sure is that it is there [was] “There was a lot of interest from investors during the roadshow for Reddit and we see it continuing to perform well,” Toney said. “The market is clearly signaling that there is an interest in more companies coming to the public markets.”
Still, Toney said there still need to be other “dynamics,” including the entry of a few more companies into the public market, before it can be said with certainty that the IPO floodgates have opened. Toney noted that some startups have raised a lot of money, so they may not be in a rush to go public and raise even more money.
“At the same time, there are cases where the latest private market funding may be higher than what the public market accepts as a public company valuation,” Toney said, adding that some startups with high private valuations may still have concerns Going to the stock market has a lower valuation.
According to deal tracking service Pitchbook, Reddit had a private market valuation of $10 billion in 2021 when it raised its last round of funding and was valued at about 6.5 based on the IPO price of $34 per share valued at billions of US dollars.
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