Reddit’s IPO kicks off with a 60% share surge in just minutes

Sophia Rodriguez
POLAND - 2023/01/06: In this photo illustration a Reddit logo seen displayed on a smartphone. (Photo Illustration by Mateusz Slodkowski/SOPA Images/LightRocket via Getty Images)

Reddit closed its first day of trading at $50.31 per share, up 48% from its IPO price of $34 per share. Although these prices are still fluctuating, it appears to be settling in at below $50. Reddit made revenue of $804.0 million in 2023 but remains unprofitable with a loss of over $90 million last year.

What’s Happening & Why This Matters

Despite this, the company has sold $203 million worth of contracts to AI companies for access to its data and holds great potential for future growth. It is important to note that the FTC is investigating Reddit’s decision to license its user data to train AI models, which could impact the company’s stock performance as the probe continues.

The 10 Largest U.S. Tech IPOs in History, Visualized
Top tech IPOs of the last two decade (2000-2020). Credit: Visual Capitalist

The successful IPO debut of Reddit, following the recent public offering of Astera, could change the landscape for companies going public. As a result, there may be more tech companies testing the public markets, especially those that can show growth and have plans related to AI. While early trading results do not always predict a smooth path for companies in the public market, recent positive results may lead to more companies considering the IPO window this year.

TF Summary: What’s Next

The IPO market has shown positive signs in the market with the Nasdaq Composite reaching a new 52-week high, indicating that tech shares are considered valuable. Despite uncertainty among secondary investors, the strong performance of Reddit and Astera may lead to increased activity in the IPO market. Given these indicators, there is hope for a resurgence in the IPO market this year.

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By Sophia Rodriguez “TF Eco-Tech”
Sophia Rodriguez is the eco-tech enthusiast of the group. With her academic background in Environmental Science, coupled with a career pivot into sustainable technology, Sophia has dedicated her life to advocating for and reviewing green tech solutions. She is passionate about how technology can be leveraged to create a more sustainable and environmentally friendly world and often speaks at conferences and panels on this topic.
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