What’s going on?

Reddit made the biggest social media IPO in years.

What does this mean?

• After listing, Reddit’s stock flew from the IPO price of $34 to just over $50, valuating the platform with 73mn daily users at around $9.5bn.
• Interestingly, Redditors were allowed to buy RDDT alongside institutions, too – what a rare opportunity.

Why should I care?

The bigger picture: The IPO market is back

• After a long dry period, Reddit’s debut suggests that the US IPO market is finally back, and amplifies the positive effect with Astera Labs’ (a chip company) stock increasing by 70% after it went public.
• Be careful though; historically, newly public stocks lose their momentum as the hype fades, and Reddit has not yet generated profitability.
• Promisingly, Reddit launched a data-licensing business last year and signed a deal with Google this year, promising to hand over data to help train Alphabet’s AI systems.

Zooming out: It’s just another drop of water

• While retail investors seem to have become more cautious about using social media to find investment ideas and leaned toward more credible, independent sources for advice, they’re not feeling as skeptical about markets; 74% surveyed said they think global stock markets will be higher a year from now, and 71% plan to make more investments this year, with tech stocks at the top of their shopping lists.

Content source: 
1. Finimize (2024) Reddit’s Credit. Available at: https://www.go.finimize.com/wp/news/reddits-credit/ [Accessed on Mar 31, 2024]