AFPE A Reddit mascot sounded the gong on the American stock market today
NOS Nieuws•donderdag, 22:09
Internet forum Reddit has had a good first day of trading. The platform was able to benefit from widely shared optimism: many stock market indices turned green today. The American central bank, the Fed, last night expressed positive views about economic growth in the near future. The plan to cut interest rates three times this year was also confirmed.
Reddit actually consists of a series of large and smaller forums, so-called subreddits. There are more than 100,000 of them in total.
Initially, the share was priced at $34, but this turned out to be on the low side and the price shot up tens of percent as soon as trading started. The stock closed at $50. This brings the market value to just over $8 billion.
The sale of shares raised a total of $748 million. The company will receive just over half a billion, money to invest in further growth, the rest will go to existing shareholders.
Largest shareholders
Reddit’s largest shareholders include Sam Altman, the chairman of ChatGPT maker OpenAI, Chinese tech giant Tencent and the parent company of American publisher Condé Nast. That is the company that bought Reddit for $10 million from its founders and largest shareholder in 2006 and then spun off.
In what is seen as an unusual move, Reddit also gave its most active users the chance to buy shares. The chief financial officer said today to news site Axios that “tens of thousands” of Reddit users have done this. It is a way to firmly retain users who are indispensable for the further growth of the platform.
Stock market analysts that NOS spoke to this week are looking at Reddit’s IPO with a critical eye. This is mainly because the company – which was founded in 2005 – is still not making a profit. However, turnover is growing, to 740 million euros last year, and losses are decreasing. Reddit is almost entirely dependent on advertising revenue, a market mainly dominated by Meta and Google.