Reddit, the self-anointed 'front page of the internet,' soars in Wall Street debut
Reddit soared in its Wall Street debut as investors pushed the value of the company close to US$9 billion seconds after it began trading on the New York Stock Exchange.
Reddit, which priced its IPO at US$34 a share, debuted Thursday afternoon at US$47 a share. The going price has climbed even higher since, with shares for the self-anointed “front page of the internet” soaring more than 55 per cent as of around 1:20 p.m. ET.
The IPO will test the quirky company’s ability to overcome a nearly 20-year history colored by uninterrupted losses, management turmoil and occasional user backlashes to build a sustainable business.
“The supply is pretty limited and there’s strong demand, so my sense is that this is going to be a hot IPO,” Reena Aggarwal, director of Georgetown University’s Psaros Center for Financial Markets and Policy, said ahead of Reddit's trading Thursday. “The good news for Reddit is it’s a hot market.”
Still, she also anticipates Reddit's IPO to be volatile. Even with a sizeable “pop,” it's possible that some might sell their shares to reap their gains soon after, potentially causing prices to drift.
The interest surrounding Reddit stems largely from a large audience that religiously visits the service to discuss a potpourri of subjects that range from silly memes to existential worries, as well as get recommendations from like-minded people.
About 76 million users checked into one of Reddit’s roughly 100,000 communities in December, according to the regulatory disclosures required before the San Francisco company goes public. Reddit set aside up to 1.76 million of 15.3 million shares being offered in the IPO for users of its service.
Per the usual IPO custom, the remaining shares are expected to be bought primarily by mutual funds and other institutional investors betting Reddit is ready for prime time in finance.
Reddit’s moneymaking potential also has attracted some prominent supporters, including OpenAI CEO Sam Altman, who accumulated a stake as an early investor that has made him one of the company’s biggest shareholders. Altman owns 12.2 million shares of Reddit stock, according to the company’s IPO disclosures.
Other early investors in Reddit have included PayPal co-founder Peter Thiel, Academy Award-winning actor Jared Leto and rapper Snoop Dogg. None of them are listed among Reddit’s largest shareholders heading into the IPO.
By the tech industry’s standards, Reddit remains extraordinarily small for a company that has been around as long as it has.
Reddit has never profited from its broad reach while piling up cumulative losses of $717 million. That number has swollen from cumulative losses of $467 million in December 2021 when the company first filed papers to go public before aborting that attempt.
In the recent documents filed for its revived IPO, Reddit attributed the losses to a fairly recent focus on finding new ways to boost revenue.
Not long after it was born, Reddit was sold to magazine publisher Conde Nast for US$10 million in 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, the company said in its IPO filing that it didn’t begin to focus on generating revenue until 2018.
Those efforts, mostly centered around selling ads, have helped the social platform increase its annual revenue from US$229 million in 2020 to US$804 million last year. But the San Francisco-based company also posted combined losses of US$436 million from 2020 through 2023.
Reddit outlined a strategy in its filing calling for even more ad sales on a service that it believes companies will be a powerful marketing magnet because so many people search for product recommendations there.
The company also is hoping to bring in more money by licensing access to its content in deals similar to the US$60 million that Google recently struck to help train its artificial intelligence models. That ambition, though, faced an almost immediate challenge when the U.S. Federal Trade Commission opened an inquiry into the arrangement.
Since Thursday just marks Reddit's first day on the public market, Aggarwal stresses that the first key measure of success will boil down to the company's next earnings call.
“As a public company now they have to report a lot more ... in the next earnings release," she said. "I’m sure the market will watch that carefully.”
Reddit also experienced tumultuous bouts of instability in leadership that may scare off prospective investors. Company co-founders Steve Huffman and Alexis Ohanian — also the husband of tennis superstar Serena Williams — both left Reddit in 2009 while Conde Nast was still in control, only to return years later.
Huffman, 40, is now CEO, but how he got the job serves as a reminder of how messy things can get at Reddit. The change in command occurred in 2015 after Ellen Pao resigned as CEO amid a nasty user backlash to the banning of several communities and the firing of Reddit’s talent director. Even though Ohanian said he was primarily responsible for the firing and the bans, Pao was hit with most of the vitriol.
Although his founder’s letter leading up to this IPO didn’t mention it, Huffman touched upon the company’s past turmoil in another missive included in a December 2021 filing attempt that was subsequently canceled.
“We lived these challenges publicly and have the scars, learnings, and policy updates to prove it," Huffman wrote in 2021. "Our history influences our future. There will undoubtedly be more challenges to come.”
Liedtke contributed this report from San Francisco.
CTVNews.ca Top Stories
PM Trudeau 'surprised' provinces unanimous on accelerated defence spending: Ford
Ontario Premier Doug Ford says his fellow provincial leaders are united in pushing for Canada to meet its NATO defence spending targets ahead of schedule, and that Prime Minister Justin Trudeau was "surprised" to hear it.
One man dead after shooting at Kitchener's 'A Better Tent City'
One man is dead after an afternoon shooting at 49 Ardelt Ave. in Kitchener.
Poilievre calls for asylum seeker cap, border plan as U.S. tariff threat looms
Conservative Leader Pierre Poilievre has demanded the federal government present a plan before Parliament to beef up border security as U.S. president-elect Donald Trump threatens to impose stiff tariffs on Canada.
Immigrants take to the streets to protest against the freezing of immigration programmes
In response to the freeze on immigration programmes announced by Ottawa, an organization that defends the rights of immigrants is organising a demonstration in front of the Montreal office of the Quebec Ministry of Immigration, Francisation and Integration early on Saturday afternoon.
Watch: Noisy throng of sea lions frolic near Jericho Beach
A large swarm of California sea lions have converged in the waters near Vancouver’s Jericho and Locarno beaches.
'Moana 2' sails to a record US$221 million opening as Hollywood celebrates a moviegoing feast
'Moana 2' brought in a tidal wave of moviegoers over the Thanksgiving Day weekend, setting records with $221 million in ticket sales, according to estimates.
Shoppers continue indulging in Black Friday sales, but mostly online
Despite retailers offering holiday discounts earlier than usual this year, U.S. consumers did more shopping on Black Friday than the days leading up to it.
Questions arise about effectiveness of body-worn police cameras in Canada
Questions surrounding the death of a man by Winnipeg police are rekindling conversations around the need for officers to wear body cameras.
A man hid 5 treasure chests worth more than US$2 million across the United States. Here’s how to find them
Inside the chests, searchers can look forward to hopefully locating items such as rare Pokémon cards, shipwreck bounty, sports memorabilia, gold and precious medals.
Local Spotlight
Auburn Bay residents brave the cold to hold Parade of Lights
It was pretty cold Saturday night, but the hearts of those in a southeast Calgary neighbourhood warmed right up during a big annual celebration.
Three million grams of cereal collected to feed students in annual Cereal Box Challenge
The food collected will help support 33 breakfast and snack programs in the Greater Essex County District School Board.
Regina's LED volume wall leaving Sask. months after opening
Less than a year after an LED volume wall was introduced to the film world in Saskatchewan, the equipment is making its exit from the province.
Temperature records broken, tied following latest snowfall in Saskatchewan
Saskatchewan received yet more snow as winter continues to ramp up on the prairies. With the increased precipitation, communities have recorded dipping temperatures – with a handful breaking or tying longstanding records.
'My dear Carmel': Lost letters returned to 103-year-old Guelph, Ont. woman
A young history buff was able to reunite a Guelph, Ont. woman with letters written by her husband almost 80 years ago.
'We have to do something': Homeless advocates in Moncton reaching out for help over holidays
Twice a week, Joanne and Jeff Jonah fill up their vehicle full of snacks and sandwiches and deliver them to the homeless in downtown Moncton, N.B.
100-year-old Winnipeg man walks blocks to see his wife
It's considered lucky to live to be 100, but often when you hit that milestone, you're faced with significant mobility issues. Not Winnipeg's Jack Mudry. The centenarian regularly walks five blocks to get where he wants to go, the care home where his wife Stella lives.
Video shows B.C. cat bursting through pet door to confront raccoons
Several hungry raccoons were chased off a B.C. couple’s deck this week by one over-confident house cat – who was ultimately lucky to saunter away unscathed.
Trailer Park Boys host Canadian premiere of new movie in Dartmouth
Sunday night was a big night for the Trailer Park Boys, as Ricky, Julian and Bubbles hosted an advanced screening of their new movie in Dartmouth, N.S.