Reddit CEO Steve Huffman has announced that he will be using the New York Stock Exchange (NYSE) to price his initial public offering (IPO) at $47 on March 21, 2024 in New York City. He stands on the floor and rings the bell.
Spencer Pratt | Getty Images News | Getty Images
Reddit’s Initial stock ratings among analysts were unchanged. But the rally continued anyway.
Shares rose 8.8% on Tuesday to close at $65.11. It is currently up 92% since hitting the stock market last week under the ticker symbol RDDT. It was the first social media IPO since then. on pinterest Available in 2019.
Reddit and existing shareholders sold 22 million shares in the offering, raising a combined total of approximately $750 million. More than 35 million Reddit shares traded Tuesday, the most since the company’s first day on the market, when 48.7 million shares changed hands.
Investors continued to buy up Reddit stock even though New Street Research issued a neutral rating on the company “after the stock price went down to the moon,” analysts said in a note issued Tuesday. Stated.
Analysts said they had no plans to change their $54 price target, saying, “We expect some volatility upon the first earnings release.” The company has not yet scheduled an announcement, but Newstreet said it will likely be announced in May. An insider is prohibited from selling shares until his post-IPO lock-up period ends 180 days after the public offering.
Analysts at New Street said that “OpenAI’s data license acquisition is baked into the stock price,” suggesting investors believe Reddit could benefit from a licensing agreement with the ChatGPT maker. are doing. Given that OpenAI CEO Sam Altman owns a significant stake in Reddit, investors expect such deals to be “added soon.” they wrote.
The company’s market capitalization had ballooned to about $12.3 billion as of Tuesday’s close. Altman’s stock is worth about $800 million.
Reddit’s core business is online advertising, but the company cites data licensing as a potentially big source of revenue. We have also recently expanded our partnerships, including: GoogleThis allows the search giant to: access More Reddit data to train your AI models.
However, the Federal Trade Commission is investigating Reddit’s data licensing business.
“While this appears relatively benign at first glance, there is potential for overreach,” New Street analysts wrote, adding, “The FTC investigation could slow the pace of new agreements and “This will certainly require dedicated attention and time to addressing this issue.” . ”
Meanwhile, some Reddit users took to the company’s subreddit on Tuesday to discuss the stock’s rise. Many users and certain company employees and their families participated in Reddit’s direct sharing program and were not subject to the lockup period, allowing them to collectively make millions of dollars in post-pop sales. Ta.
1 Reddit user with username ‘bkarp00’ I have written“It seems like everyone involved in the IPO is contributing to today’s stock price as they are able to get cash quickly while there are few people willing to sell at this level,” said a shareholder who believes the value of Reddit’s stock will continue to rise. mentioned.
User ‘IrishRun’ wrote: ‘I’ve been kicking myself for not buying more shares, but there was no guarantee I’d receive the number of shares I asked for and even afterwards I’d probably wish I had bought more.’
