Reddit goes public: Why now?
In this photo illustration a Reddit logo is seen on a mobile phone and a computer screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images)
Reddit is now public, with shares traded Thursday on the New York Stock Exchange under the ticker symbol "RDDT."
The IPO will test Reddit’s ability to overcome a nearly 20-year history involving financial losses, management problems and some user reactions encouraging them to create a sustainable business, the Associated Press reported.
What is Reddit?
Reddit is a social news aggregation and forum network that’s home to thousands of communities, endless conversation and authentic human connection, according to Reddit’s website.
The San Francisco-based company was launched in 2005 by Steve Huffman and Alexis Ohanian. Reddit was sold to magazine publisher Conde Nast for $10 million in a deal that meant the company didn’t need to run as a standalone business. Even after Conde Nast parent Advance Magazine Publishers spun off Reddit in 2011.
Reddit IPO
Reddit priced its IPO at $34 per share, giving them a market value of $6.4 billion.
The company set aside up to 1.76 million of 15.3 million shares offered in the IPO for users of its service. Per the IPO custom, the remaining shares are expected to be purchased primarily by mutual funds and other institutional investors betting Reddit is ready for prime time in finance.
Reddit noted in its IPO filing that it didn’t begin to focus on generating revenue until 2018. Those efforts, centered around selling ads, have helped the company increase its annual revenue from $229 million in 2020 to $804 million last year. But the company also posted combined losses of $436 million from 2020 through 2023, the AP reported.
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Reddit stock price
RDDT debuted Thursday afternoon at $47 a share. At the close of trading, it was up 48% at $50.44, backing off a peak of $57.80.
"This volatility is not surprising because there has been a lot of buzz around Reddit," Reena Aggarwal, director of Georgetown University’s Psaros Center for Financial Markets and Policy, told the Associated Press.
Reddit AI plans
Reddit previously said it agreed to a deal with Google for roughly $60 million, that allows Google to use posts from Reddit for training its artificial intelligence models and to improve services such as Google Search. This deal also provides Reddit access to Google AI models for improving its internal site search and other features.
In February, Reddit announced plans for its IPO, with the company reporting a net income of $18.5 million — its first profit in two years — in the October-December quarter on revenue of $249.8 million.
The Associated Press contributed to this report. This story was reported from Washington, D.C.