By Michael Liedtke, Wyatte Grantham-Philips | The Associated Press
Reddit soared in its Wall Street debut as investors pushed the value of the company close to $9 billion seconds after it began trading on the New York Stock Exchange.
Reddit, which priced its IPO at $34 a share, debuted Thursday afternoon at $47 a share. The going price has climbed even higher since, with shares for the self-anointed “front page of the internet” soaring more than 55% as of around 1:20 p.m. ET.
The IPO will test the quirky company’s ability to overcome a nearly 20-year history colored by uninterrupted losses, management turmoil and occasional user backlashes to build a sustainable business.
“The supply is pretty limited and there’s strong demand, so my sense is that this is going to be a hot IPO,” Reena Aggarwal, director of Georgetown University’s Psaros Center for Financial Markets and Policy, said ahead of Reddit’s trading Thursday. “The good news for Reddit is it’s a hot market.”
Still, she also anticipates Reddit’s IPO to be volatile. Even with a sizeable “pop,” it’s possible that some might sell their shares to reap their gains soon after, potentially causing prices to drift.
The interest surrounding Reddit stems largely from a large audience that religiously visits the service to discuss a potpourri of subjects that range from silly memes to existential worries, as well as get recommendations from like-minded people.
About 76 million users checked into one of Reddit’s roughly 100,000 communities in December, according to the regulatory disclosures required before the San Francisco company goes public. Reddit set aside up to 1.76 million of 15.3 million shares being offered in the IPO for users of its service.
Per the usual IPO custom, the remaining shares are expected to be bought primarily by mutual funds and other institutional investors betting Reddit is ready for prime time in finance.
Reddit’s moneymaking potential also has…
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