Reddit stock slated to start trading on NYSE
Investors have upvoted Reddit in droves.
Reddit stock is slated to start trading on the New York Stock Exchange Thursday after the IPO priced at $34 a share — at the top of its expected initial price range — as investors showed enthusiasm for a social media company that has ambitious expansion plans but has never been profitable.
Valued at around $6.4 billion, Reddit is trading under the ticker symbol RDDT. The IPO is being viewed as a test of investor appetite for a social media company in an era where artificial intelligence is all the rage in the technology industry.
Reddit, over the years, has been beset with leadership crises and controversies over the proliferation of racist, misogynistic and other toxic content going unchecked before laboring to clean up its act more recently.
The premiere of Reddit on the New York Stock Exchange brought a lucrative payday for Condé Nast, the owner of Reddit, which controls about a third of the company's shares. The publisher reaped about $1.4 billion in the debut, after paying just $10 million for Reddit in 2006.
Behind Condé Nast, Reddit's No. 2 shareholder is Chinese tech company Tencent. Sam Altman, the CEO of ChatGPT maker OpenAI, is Reddit's third-largest shareholder, according to a filing with the Securities and Exchange Commission.
A decent chunk of Reddit's shares have been set aside for users of Reddit, and individual investors, an uncommon move that could add an element of unpredictability to the stock. But it remains to be seen what kind of influence the regular Reddit users will have on the stock's performance.
Journey from college dorm room to the NYSE
Founded in 2005 by Alexis Ohanian and his dorm-mate at the University of Virginia, Steve Huffman, the site started as an gathering place for people to anonymously discuss politics, popular TV shows and absurd memes. One Reddit community has sprung up around the sharing of photos depicting bread stapled to trees.
The site became known for "AMAs," or "ask me anything" question-and-answer sessions that sometimes attracted prominent figures, like President Barack Obama, evolutionary biologist Richard Dawkins and actor Harrison Ford.
Over the years, its user base has grown, with now 76 million people visiting the site daily across more than 100,000 communities, according to its filing to regulators.
Reddit has long been the world's most popular message board where scores of volunteer moderators decide the rules of each community — a level of autotomy unusual for a social network the size of Reddit, but something that has made many users forge deep ties and allegiances to the site.
Reddit users can purchase stock based on "karma"
In a letter earlier this month that accompanied its regulatory filing, Huffman, Reddit's CEO, said he hopes going public will benefit the site's community, along with investors. "Our users have a deep sense of ownership over the communities they create on Reddit," Huffman wrote.
As such, Reddit set aside about 8% of company share for superusers of the site, with each users' allotment determined by "karma," a kind of reputation assessment based on a user's contributions to the site.
In 2021, Reddit became the center of a stock market firestorm when a subreddit known as WallStreetBets helped organize small investors to send the stock of videogame retailer GameStop soaring to extraordinary highs, shooting up more than 1700 percent, an event that prompted a Wall Street trading frenzy and put the spotlight on Reddit's role in so-called meme stocks.
Ahead of the public offering, Redditors in WallStreetBets appeared eager to throw sand in the gears yet again by betting against Reddit for, as they see it, forsaking the site's scruffy authenticity in order to maximize profits.
"Reddit cannot pivot into something that will magically attract new users to the cite creating a miracle monetization regime," wrote one user in WallStreetBets. "The golden age of Reddit has passed, if it ever existed...The desperate attempt to cling to an overvalued market price will destroy the company from the top throughout the long term."
"It's time we grow up and behave like an adult company"
In recent months, Reddit has taken a number of controversial steps widely seen as preparing for a public offering, which it first unveiled plans to take the public public. Among them, charging third-party developers for access to its back-end data. The change prompted thousands of Reddit communities to stage an organized blackout.
Last June, Huffman told NPR that Reddit did not change the company's plans to start charging for data, despite how it upended the popular site.
"It's a small group that's very upset, and there's no way around that. We made a business decision that upset them," he said.
Reddit becoming a public company has made many diehard Reddit bristle since the corporatization chafes against the renegade spirit of the site.
In response, Huffman told NPR in June that the reckoning that Reddit is now in the grips of has been long overdue.
"We're 18 years old," Huffman said. "I think it's time we grow up and behave like an adult company." [Copyright 2024 NPR]
