In a dazzling debut, Reddit Inc. shares surged by a staggering 62% from the $34 IPO price to $55 in initial trading, marking a monumental achievement for the 19-year-old social media platform.
The IPO, designed to democratize investment, set out to level the playing field by inviting retail investors to the table alongside institutional players. A notable 2 million of the 159 million shares available were earmarked for retail participants.
“The best investors in Reddit are the people who use Reddit,” proclaimed CEO Steve Huffman.
One speculative query on the Reddit board r/RedditIPO posed the question: “At what price per share would Reddit reach a $10 billion market cap?”
The answer seemed to materialize at the $55 per share mark, catapulting the company’s valuation by $3.6 billion to $6.4 billion post-IPO.
Also Read: Reddit Stock Opens For Trading At $47: Everything You Need To Know
Anticipation swirled pre-debut, with Reddit stock poised for a strong start. Speculation indicated a jump to $55 in pre-market trading, a forecast that materialized as shares surged to that level within a mere half-hour of the opening bell at 1:15 ET.
Seeking Alpha hinted at Reddit’s potential to become a meme stock, suggesting heightened volatility and potential for speculative fervor akin to the Gamestop and AMC craze of 2021, fueled by Reddit’s own r/wallstreetbets community.
There was no shortage of skepticism, with critics voicing concerns across social and traditional media platforms.
CNBC’s business correspondent Susan Li quipped, “In a dry IPO spell, a $6 billion, unprofitable company garnering such fervor is quite the anomaly.”
Adam Taggart, host of Thoughtful Money, echoed these sentiments, pondering Reddit’s viability post-AI craze: “How will this company generate substantial revenue?”
Thomas Smale, CEO of FE International, forecasted a brief honeymoon for the shares, pointing to Reddit’s lack of profitability.
Smale elaborated in an email to Benzinga, “With tightening liquidity and rising capital costs, investors are prioritizing firms with robust fundamentals and clear paths to profitability—areas where Reddit currently falls short.”
Now Read: Reddit IPO Potential ‘Watershed’ Moment For Tech Industry, Says Wedbush’s Dan Ives: Expects It To Hit $1B In Revenue Next Year
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