Reddit user makes $20,000 during stock's first day of trading
Fast Facts
Reddit debuted March 21 on the New York Stock Exchange under the ticker RDDT.
The stock spiked as much as 70% above its IPO price of $34 throughout the trading day.
At its peak on March 21, Reddit boasted a $10 billion market cap.
Reddit (RDDT) , the 19-year-old social media platform known for its millions of passionate internet communities, debuted on the New York Stock Exchange March 21 under the ticker RDDT. Shares of the company soared as much as 70% above its initial public offering (IPO) price of $34 — at its peak, Reddit was valued at around $10 billion.
This spike softened throughout the day, with the stock eventually closing out its first day on the market at a share price of $50.44, up slightly more than 48% from its IPO. At close, Reddit had a market cap just above $8 billion.
The IPO valued Reddit at $6.4 billion, with the company and its selling shareholders raising nearly $750 million.
Related: Expert on government-commissioned AI threat report: A lot of hype, but a good plan
One Reddit user wrote in a post that they bought, and quickly sold, shares in the social media platform earlier in the day, when the stock hit a per-share price of $54, making $20,000 in the process.
"Even if it goes to 100/share, I'm cool and feel not an ounce of FOMO," they wrote. "This is 20K I didn't have an hour ago."
Reddit's debut marks the end of a lengthy journey undertaken by the company to go public, which began in 2021 when Reddit confidentially filed a draft of its IPO.
Reddit officially filed its IPO prospectus with the Securities and Exchange Commission in February, detailing a net loss of $90 million for 2023 on revenue of $804 million.
Reddit at the same time announced a deal with Google that, for $60 million a year, will allow Google to, among other things, train its artificial intelligence models on Reddit's content.
The company also set aside 8% of the shares on offer for certain Reddit users and moderators, in addition to friends and family members of company insiders.
It marks the first social media IPO since Pinterest went public in 2019.
Related: Popular social media platform to sell user data to the company behind ChatGPT
r/Wall Street reacts
The debut, according to FirstMark Capital founder and partner Rick Heitzmann, is a "litmus test for the IPO buyer sentiment because it's not a premium company. It's at the end of its social cycle. Yet there's tons of demand."
He told CNBC Wednesday that he expects the stock to "trade up" upon its debut.
While Wedbush's Dan Ives acknowledged that the burgeoning AI sector presents a strong opportunity for Reddit to monetize its enormous data piles, he said that now, the question is all about execution.
"Can they be successful and can they monetize? Now it's just, not just talk the talk, walk the walk. Execute on the numbers," Ives told CNBC. "Where in the social media tiering structure can they be."
Deepwater's Gene Munster said that this IPO is not really about the fundamentals. The future potential of the stock is all about profitability and ad spending, he said, saying the journey toward that kind of growth will determine whether Reddit can "live up to its meme stock potential."
"Grab the popcorn, throw out the fundamentals, and enjoy Reddit's first day of trading," he said. "Safe to say, the longs and shorts will battle it out over the next month."
Many users in r/WallStreetBets, meanwhile, expressed their eagerness to short the stock.
Contact Ian with AI stories via email, ian.krietzberg@thearenagroup.net, or Signal 732-804-1223.
