The action of the American social network Reddit opened up almost 40% for its first listing on the New York Stock Exchange on Thursday March 21, a positive sign for an IPO market that is still recovering.
The stock, listed on the New York Stock Exchange under the symbol RDDT, began trading shortly after 1:15 p.m. local time (6:15 p.m. Paris time), at $47 per unit (a little over 43 euros), i.e. 38% better than the price set by the company before the introduction. The title even briefly rose to $57.8, or 70% better than the introductory price, which itself was at the upper limit of a range previously established by the group. Around 7:20 p.m., it showed an increase of 42.94%, to $48.6, which valued the platform at around $8.6 billion (7.9 billion euros).
This is the first introduction of a social network to the New York Stock Exchange since that of Pinterest in 2019. The operation allowed Reddit to raise a little more than $500 million thanks to the issuance of 15, 2 million new titles. This is a turning point for the platform created in 2005 by two students from Virginia. It is home to thousands of discussion forums on a wide range of topics, within an ecosystem that operates largely on volunteers, as moderators are not paid.
On the occasion of its IPO, Reddit reserved 1.76 million shares for “Redditors”, that is to say the most active users and moderators on the site.
The listing of the platform was an important test for the IPO market, which has been slow since a surge in September 2023.
For the president of the NYSE, Lynn Martin, the arrival of Reddit in good conditions shows that “the introduction market is open”she declared on the CNBC channel. “This is a great example of a company that has focused on its business and strategy over the past few years, and they are getting a warm reception today.”she added.
“A crazy place”
Reddit claims 73 million daily active users on average and over 267 million weekly users. Despite its success with the public, the platform has never managed to generate an annual profit. “Profitability is an important milestone for us, and we are getting closer and closer to it”declared on CNBC, the general director, Steve Huffman, co-founder who returned to the helm in 2015.
Like Facebook, Instagram, YouTube or TikTok, its economic model is based on advertising, but the revenue that the platform derives from it is incommensurate with those of its major rivals. In 2023, Reddit generated $804 million in revenue, but suffered a loss of $90.8 million.
The platform also intends to grow its revenues through contracts giving access to public data on its site, very popular with artificial intelligence (AI) companies, which use it to develop their interfaces.
The social network was bought in 2006 by Condé Nast, publisher of magazines Vogue, The New Yorker And Vanity Fair. The company became an independent subsidiary in 2011, but Advance, the controlling holding company of Condé Nast, is still the largest shareholder.
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Sam Altman, boss of OpenAI – creator of the generative artificial intelligence software ChatGPT – is one of Reddit’s most important investors. He led a fundraiser in 2014 and briefly headed the social network.
The IPO sparked a wave of discontent on Reddit. Dozens of people predicted, on the forum, the fall of the stock and claimed to want to contribute to it by betting on the decline, recalling that Reddit had never made a profit and accusing its boss of greed. “Reddit, that’s it”reacted Steve Huffman. “Reddit is people. It’s sometimes a fun and unique place, but also, sometimes, a crazy place. » “Reddit is nothing without its users and communities”he continued.