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Reddit’s Witnesses A Mixed Reception At The Market Since Its IPO Launch!

By TD NewsDesk

TD NewsDesk

Updated on Fri, Mar 29, 2024

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It’s been an eventful month for Reddit, the news and forum social networking site, with ups and downs.

From the announcement of Reddit Pro, its new suite of tools that’s a game-changer for businesses looking to ramp up their presence on the platform, to reportedly striking a $60 million content licensing deal with an unnamed AI company believed to be Google, Reddit has been in the news quite a bit lately.

Yet, the most interesting story of the social networking site was probably its highly anticipated IPO (Initial Public Offering) launch that’s been in the works for over three years.

Reddit finally completed its IPO launch on March 21, becoming the first major social media company to go public since Pinterest in 2019 but the path after its launch hasn’t been so smooth.

So, what problems has Reddit come across in its IPO journey? Let’s explore!
 

How Is Reddit Performing At The Market?

 
  • On March 21, 2024, Reddit Inc. AKA Reddit launched its Initial Public Offering (IPO) on the New York Stock Exchange (NYSE) under the stock ticker symbol “RDDT.”

  • Reddit priced its IPO at $34 a share, the top of the expected range, having originally planned to price the shares at $31 or $34.

  • As per a news release at the time of announcing the IPO, Reddit offered an aggregate 22,000,000 shares of its Class A common stock, 15,276,527 of which are being sold by Reddit and 6,723,473 of which are being sold by certain selling stockholders.

  • The news release further mentioned, “Reddit will not receive any proceeds from any sale of shares by the selling stockholders. In addition, Reddit has granted the underwriters a 30-day option to purchase up to an additional 3,300,000 shares of its Class A common stock at the initial public offering price, less underwriting discounts and commissions.”

  • On the first day of trading, the shares rose almost 48%, reaching a high of $57.80 and closing at $50.44, raising around $750 million combined in the offering, while the company collected about $519 million.

  • Sam Altman, the CEO of OpenAI, who is an early Reddit investor and former board member, witnessed his stake boom to over $613 million from $200 million.

  • On the second day (Friday), Reddit’s shares closed at $46, dropping from the initial rise.

  • Coming to March 25 (Monday) Reddit hit a high of $61.94 and closed at $59.80, while March 26 (Tuesday) hit a high of $74.90 and closed at $65.11.

  • However, March 27 (Wednesday) started a downfall for Reddit’s stock prices, closing at $57.75 and March 28 (Thursday) saw the price drop even lower, closing at $49.32, with the lowest at $49.10 and highest at $55.30.

  • The week also saw Reddit CEO and President Steve Huffman selling 500,000 shares on March 25, which was believed to be an expected move as it represented only “a portion of his holdings”.

  • While Reddit CFO Andrew Vollero sold 71,765 shares, the company’s COO Jennifer Wong also sold 514,000 shares, reducing her holding to 1.4 million shares.

  • All the transactions were believed to be executed at an average price of $32.3 per share.

  • The stock market will remain closed on March 29 (Friday) on account of Good Friday.


TechDogs-"An Image Of Reddit's Logo"  

What Did Experts Say About Reddit’s IPO Movement?

 
  • Ben Silverman, Vice President of Research at Verity, said, “There’s always a bit of a disconnect, because the purpose of bringing the company public is twofold.”

  • “It’s not just to generate liquidity for the company itself so that it can expand and grow. In these situations, it often allows insiders to cash out to generate liquidity, and that’s something executives have to consider here.”

  • “If the prospects are so bright, why are insiders selling?”


Do you think Reddit will be able to bounce back in the stock market?

Let us know in the comments below!

First published on Fri, Mar 29, 2024

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