Reddit IPO: Shares Soar in Debut, Company Nets $519 Million
The Front Page of the Internet Goes Public
Reddit (Nasdaq: RDDT), often dubbed “the front page of the internet,” recently made waves with its highly anticipated initial public offering (IPO). On March 21, 2024, Reddit’s shares hit the New York Stock Exchange, trading under the ticker symbol “RDDT.” Let’s dive into the details of this landmark event.
The Numbers: A Windfall for Existing Shareholders
IPO Price: The initial offering price was set at $34 per share, valuing Reddit at $6.4 billion — a valuation lower than its previous $10 billion private valuation.
Stock Performance: Reddit shares opened at $47 and climbed as high as $57.80 apiece, settling around $50 (+47%) by 1:50 p.m. ET on the first trading day.
Net Proceeds: Through the IPO, Reddit raised an impressive $519 million.
Existing Shareholders: Notable beneficiaries include Condé Nast parent company Advance Publications and OpenAI CEO Sam Altman. Advance Publications owns 42.2 million shares, worth over $2.3 billion post-IPO. Altman’s stake, with 11.37 million shares, is currently valued at more than $600 million.
Lockup Period: Pre-IPO shares held by insiders, including Advance, Altman, and others, are subject to a 180-day lockup period, during which they cannot sell their shares.
The Purpose: Communities and Creativity
Reddit’s mission centers around the belief that communities unlock the power of human creativity. With over 100,000 active subreddits, the platform has harnessed this creativity since its founding. The IPO proceeds will be used for general corporate purposes and may also go toward in-licensing, acquisitions, or investments in technologies and intellectual property that complement Reddit’s offerings.
A Unique Arrangement: Shares for Moderators and Power Users
In a novel move, Reddit’s underwriters reserved shares for moderators and other power users on the platform. Up to 1.76 million shares (8% of the IPO) were available through a directed share program. Eligible users, certain board members, and friends and family of employees and directors had the opportunity to participate.
The First Social Media IPO in Recent Years
Reddit’s IPO marks a significant milestone — it’s the first major social media IPO in recent years. While tech giants like Facebook and Twitter went public years ago, Reddit’s debut brings renewed attention to the social media landscape. Investors are closely watching how Reddit’s unique community-driven model will fare in the public markets.
Meta: The Leading Social Media Company
In the ever-evolving world of social media, Meta (Nasdaq: META) (formerly Facebook) stands out as the dominant force. With a market capitalization exceeding $1 trillion, Meta’s influence extends far beyond its flagship platform. From Instagram to WhatsApp, Meta’s ecosystem encompasses billions of users worldwide. As Reddit joins the public markets, it faces competition not only from other social media players but also from Meta’s formidable reach.
Conclusion:
The Reddit IPO shows that the investors can be rewarded by investing in innovative social media platforms that are giving advertisers new ways to reach audiences and get the brand messaging in front of the right people in meaningful ways. Thumzup believes that similar to Reddit, it is offering a new way for advertisers to get their message in front of the right audience in ways that create a lasting impression.