Shares of social platform Reddit soared after it offered formerly private shares for public purchase.
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Reddit shares began trading on the New York Stock Exchange on Thursday, ushering in a new era for the social discussion site as a publicly traded company.
The price of the stock was originally $34 (31 euros) per share, but when the market opened, this value increased to 47 US dollars (43 euros).
Later in the day, eager investors pushed the stock up to $57.80, although the closing price fell slightly to $50.44.
The demand surrounding Thursday's offering is a welcome sign for the IPO market after two lackluster years of trading.
According to S&P Global, just 370 IPOs were completed worldwide in the last three months of 2023, the worst fourth-quarter performance since 2012.
Reddit's move to go public will also test the company's ability to overcome a nearly 20-year history of continuous losses.
The company has never made an annual profit and posted a loss of $91 million (€83 million) last year.
“Reddit's successful IPO represents a return to the pre-pandemic days, when investors were happy to buy shares in loss-making companies if they presented a compelling narrative,” said Dan Coatsworth, investment analyst at AJ Bell.
On Thursday, Reddit's closing price gave it a market value of $9.5 billion, higher than the $6.4 billion implied by its IPO price, but it is still a small player alongside other social media outlets -Company.
Part of Reddit's success story is its connection to artificial intelligence, added Dan Coatsworth.
Reuters reported last month that Reddit has reportedly struck a deal with Google to enable training of AI models using its content, a move that will allow Reddit to diversify its revenue streams.
The IPO has also drawn attention due to Reddit's decision to allow users of its platform to buy stocks, even though IPOs are typically only open to institutional investors.
Reddit has reserved up to 1.76 million of the 15.3 million shares it is offering to the site's users.
But some analysts fear the excitement surrounding the IPO will result in the listing becoming a “meme stock,” and a number of Reddit users say they will short the securities.
This means they buy expensive stocks and immediately sell them, hoping the price will drop so they can buy them back at a lower price.
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