Trading in Reddit gets underway on Wall Street

21st Mar 2024 13:00

(Sharecast News) - Trading in social media platform Reddit got under way on the New York Stock Exchange on Thursday, in one of the most high- profile tech debuts of recent years.

The social media platform sold around 22m shares at $34 a share, at the top of its $31 to $34 range, giving it a valuation of around $6.4bn.

The initial public offering has raised around $748m.

Co-founder and chief executive Steve Huffman has sold 500,000 of his own shares for around $17m, the Financial Times reported.

Reddit, where communities form niche online forums dubbed subreddits, was founded in 2005 but had yet to break even.

The San Francisco-based firm posted sales of $804m last year, after tighter moderation helped boost advertising revenues. It posted an annual loss of $91m in 2023.

Reddit has said it plans to diversify revenues going forward, including adding e-commerce features. In February, it announced a $66m deal to provide artificial intelligence training data to Alphabet's Google.

However, since then Reddit confirmed that the US Federal Trade Commission was probing the firm's sale, licensing and sharing of user-generated content with third parties in relation to AI models.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Fundamentally, Reddit is not Nvidia - huh - they haven't had a profitable year since the 2005 launch and the user growth has stalled near 500m for the past three years.

"Therefore, Redditers should give a supportive hand to make buzzy headlines."