Wall Street reacted very favourably to the initial public offering of social media platform Reddit on the New York Stock Exchange on Thursday.

Shares of the San Francisco-based company opened at $47 on the New York Stock Exchange on Thursday, after pricing at $34 (the high end) in the IPO.

At one point Reddit’s shares rose a staggering 70 percent, peaking at $57.80 a share, before ended trading at $50.44 (a 48 percent increase). It raised $748m

Last week Reddit in a regulatory filing revealed it had been seeking a valuation of up to $6.4 billion (£5bn), but it ended up being valued at $8.02 billion (£6.4bn).

Successful IPO

However this is still lower than what the company was worth in 2021, when a $1.3bn funding round valued it at $10bn.

Reddit had filed for its offering in February 2024, which at the time had prompted concern from Reddit users and moderators, worried the site would go downhill as it focused on the interests of investors rather than those of users.

Reddit moderators have a history of conflict with the company’s management, including shutting down high-profile discussions last year in protest against a decision to begin charging for the Reddit API.

The company did not back down on its decision, however.

Regulatory filings revealed the company, founded in 2005 – nearly 20 years ago – has never made a profit and lost more than $90 million (£71m) last year. The firm still relies on advertising for the vast majority of its revenue.

Reuters reported however that Reddit had lured investors by positioning its content as a training ground for artificial intelligence (AI) programs. It noted that Reddit had recently struck a data licensing deal with Google worth about $60 million a year (that licensing deal is being examined by the FTC).

“At the core we are a growth company. Achieving our mission means that we want to grow users and community,” Jen Wong, Chief Operations Officer at Reddit was quoted as saying.

Poorer cousin?

Reddit’s IPO has been a long time coming. Reuters noted that the firm had confidentially filed for an IPO in December 2021, but a stock rout caused by Russia’s war in Ukraine and the Federal Reserve’s hiking of interest rates froze much of the IPO market and pushed it to delay.

After its launch in 2005, Reddit has remained a consistent presence in the social media sector, when its iconic logo – featuring an alien with an orange background – is one of the most recognized symbols on the internet.

Its 100,000 online forums, dubbed “subreddits,” allow conversations on a huge range of topics.

But since its foundation Reddit has remained the poorer cousin to the likes of its much larger cousins Facebook and X (formerly Twitter), and has failed to reap the financial success of those platforms.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

Recent Posts

HP Sales Beat Expectations As PCs Return To Growth

HP revenues beat analysts' expectations as commercial PC sales return to growth after two-year post-pandemic…

7 hours ago

Meta Finds Facebook Propaganda Network Using Generative AI

Meta Platforms finds influence network focused on Gaza war that for first time uses generative…

8 hours ago

OpenAI Board ‘Not Aware Of ChatGPT Launch’

Former OpenAI board member gives fullest description to date of events that led to surprise…

8 hours ago

BlackRock $20bn ETF Becomes World’s Biggest Bitcoin Fund

BlackRock's iShares Bitcoin Trust dethrones decade-old Grayscale investment vehicle to become world's biggest Bitcoin fund,…

9 hours ago

Shark Tank Host Launches Crowdfunding Site For TikTok Buy

Kevin O'Leary, investor and host of reality programme Shark Tank, launches crowdfunding effort to gauge…

9 hours ago

Former FTX Executive Ryan Salame Sentenced To Seven Years

Former Bankman-Fried top lieutenant Ryan Salame given longer sentence than prosecutors had asked for over…

10 hours ago