Reddit Soars 48% in Debut as AI Pitch Gets Warm Reception

Reddit Inc. shares soared 48% above their initial public offering price, as investors embraced the social media company’s vision of profiting from the growth of artificial intelligence.

The San Francisco-based company’s stock closed at $50.44 each on Thursday in New York, a day after the company and some of its shareholders raised $748 million in an offering priced at the top of a marketed range.

Reddit’s IPO is the fourth largest on a US exchange in 2024, as the market for first-time share sales continues to rebound after two of the slowest years in a decade. The successful listing is set to fire the starting gun for tech companies whose offering plans have been on hold.

The AI revolution was at the center of Reddit’s proposed value proposition to investors, as companies eye the record-setting rallies in stocks like chipmaker Nvidia Corp.

“Large language models need data,” Reddit Chief Operating Officer Jennifer Wong told Bloomberg TV. She described the company’s 19 years worth of “human experience organized by topic, with moderation and relevance — that is incredibly important to building both a chat capability and the freshness of information. That is an area where we see opportunity.”

Two-Year Slog

Reddit’s more than two-year slog to listing reflects the ups and downs of the market, beginning with its initial confidential filing in 2021, when IPOs on US exchanges set an all-time record of $339 billion, according to data compiled by Bloomberg. IPOs in the US have tumbled since then, reaching only $26 billion last year, the data show.

The company’s shares jumped as much as 70% on its first day. The closing price of $50.44 each gives it a market value of $8 billion based on the outstanding shares listed in its filings with the US Securities and Exchange Commission. Including stock options and restricted share units, Reddit’s fully diluted valuation is closer to $9.5 billion, just shy of the $10 billion figure it had achieved in a 2021 funding round.