(New York) The action of the American social network Reddit rose more than 45% for its first listing on the New York Stock Exchange on Thursday, a positive sign for a still recovering IPO market.
The stock, listed on the New York Stock Exchange under the symbol RDDT, began trading shortly after 1:15 p.m. at US$47 per unit, 38% better than the price set by the company before the listing.
The stock even briefly rose to US$57.80, or 70% better than the introductory price, which itself was at the upper limit of a range previously established by the group.
Around 3:20 p.m., it showed an increase of 46%, to US$49.56, which valued the platform at around US$8.6 billion.
This is the first listing of a social network on the New York Stock Exchange since Pinterest in 2019.
The operation allowed Reddit to raise a little more than US$500 million thanks to the issuance of 15.2 million new securities.
This is a turning point for the platform created in 2005 by two students from Virginia, considered as a separate player in the world of social networks, less restricted and where commercial imperatives were less significant.
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 slowing down since a surge in September 2023.
For the president of the NYSE, Lynn Martin, the arrival of Reddit in good conditions shows that “the market for introductions 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,” said CEO Steve Huffman, co-founder who returned to the helm in 2015, on CNBC.
Like Facebook, Instagram of the Meta group, YouTube (Google) or TikTok, its economic model is based on advertising but the income it earns 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, Condé Nast’s controlling company, is still the largest shareholder.
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, particularly within the stock market forum WallStreetBets.
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 is it,” Steve Huffman said in response to a question on WallStreetBets. “Reddit is people. It’s sometimes a fun and great place, but also, every now and then, a crazy place.”
“Reddit is nothing without its users and communities,” he continued.
In June, the leader had already been criticized for abruptly raising Reddit data access prices for third-party developers.
The platform has until now provided access at moderate prices, or for free, to public data on its site to promote the development of an ecosystem.