Reddit (RDDT) stock soared on its first day of trading, ending the day up nearly 50% from its initial public offering price of $34 a share.
The stock closed at $50.44 on Thursday, up 48% from the IPO price and giving the company a market cap just north of $8 billion.
The social network's debut on the New York Stock Exchange had been highly anticipated, given the lull in public listings over the past two years. Reddit is the first major social media company to go public since Pinterest (PINS) in 2019.
The user-generated discussion-style platform has been around since 2005, but it gained increased recognition during the meme frenzy in 2021. At that time, retail traders on the subreddit WallStreetBets encouraged short squeezes on shares of video game retailer GameStop (GME), theater chain (AMC), and other heavily shorted stocks.
The IPO was also expected to gauge investors' appetite for tech-related offerings at a time when monetary policy is tight.
Reddit's revenue in 2023 jumped about 20% year over year to $804 million, according to the company's S-1 filing. About 98% of sales in the third quarter of last year were generated from advertising on the platform.
The company's net loss narrowed from $158.6 million in 2022 to $90.8 million last year.
In an interview with Yahoo Finance, co-founder and CEO Steve Huffman noted that the company was profitable on an adjusted EBITDA basis in the second half of last year.
"I think if we can keep doing that we're in great shape," Huffman told Yahoo Finance's Brian Sozzi ahead of the listing on Thursday morning. "We have such high margins that if [we] just continue to sell and be mindful about costs, this company scales in a really impressive way."
The site had 500 million monthly visitors in December 2023, the S-1 filing said, and an average of 73.1 million unique daily active users during the three months ending in December.
Reddit's filing also noted the company sees an opportunity to license its data for AI use.
"On the data side we've got almost two decades of human conversations about anything and everything. In an AI world, where everything is increasingly written by AI, the human-generated content actually becomes more valuable over time," Huffman said on Thursday.
In a nod to Redditors, the company set aside 1.76 million shares for sale to eligible users and moderators on the platform with no lock-up period.
The move lends itself to volatility, said Headline venture partner Kamran Ansari told Yahoo Finance in a recent interview.
"You may see a big run-up in the stock price and a drop," he said. "Because this has such a rabid community around it, the Reddit users, you could see Reddit itself ironically become a meme stock the way that you saw happen with like AMC and GameStop."
Ines is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre
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