- Reddit shares soared 30% after a successful IPO, raising $750 million and valuing the company at $6.5 billion publicly versus $10 billion privately
- The IPO rewarded major stakeholders like CEO Sam Altman, whose stake grew over 3x to $613 million, and provided a payday for Reddit moderators
- Reddit’s strong debut is a positive sign for the tech IPO market after a long freeze, though some startups may not rush to go public with ample private capital
Reddit, the popular online discussion platform, saw its shares close 30% higher on Monday following the company’s successful initial public offering (IPO) last week.
The Social Media Darling’s Highly Anticipated Debut
The social media company raised roughly $750 million through the offering, pocketing $519 million. Reddit shares skyrocketed 48% when trading began on the New York Stock Exchange under the ticker symbol “RDDT.”
A number of Reddit moderators and users, known as “Redditors,” earned millions collectively as they were allotted shares through a directed-share program. This allowed them to participate alongside corporate insiders and friends and family.
Major Investor Reaps Rewards
One major investor who benefited handsomely was Sam Altman, CEO of OpenAI and former Reddit board member. His stake grew from $200 million to over $613 million after the IPO.
Reddit’s debut was closely watched by investors to gauge the potential for more tech IPOs. It came during the same week that data center hardware firm Astera Labs saw its shares leap 72% in its own market open.
Signs of Life in the IPO Market
Reddit was the first major social media IPO since Pinterest in 2019. Its strong performance signals warming investor appetite after a long freeze.
Plexo Capital’s Lo Toney, a Reddit shareholder, said the IPO was “a positive sign not only for Reddit, but I think also the tech industry and what it might mean for future IPOs.”
However, Toney cautioned more companies need to test the public markets before concluding the IPO floodgates have reopened. With lots of capital already raised, some startups may not rush to go public.
Valuation Gap From Private to Public
Others may be wary of lower public valuations. Reddit was valued at $10 billion privately in 2021 but its IPO price tagged it at $6.5 billion.
The markets will be watching closely for other tech unicorns to follow Reddit’s lead. For now, its shares show no signs of losing their momentum.
