Watching a website well-known for anonymous debates about video games, cryptocurrencies, and the best way to cook steak ring the opening bell at the New York Stock Exchange is subtly ridiculous. However, that is essentially what occurred on March 21, 2024. Reddit debuted at $34 per share on the NYSE under the ticker RDDT, and in a matter of seconds, it was trading closer to $47. Shares had increased by more than 55% by midday. It appeared that the audience was prepared to pay.
In stark contrast to the $10 billion private valuation Reddit had carried back in 2021, when it first filed to go public before discreetly abandoning the endeavor, the valuation figure hovering just below $9 billion was the one that stuck in the minds of many analysts. Without much fanfare, that previous attempt came and went. This time, the mood was different, the market was warmer, and Reddit had something fresh to offer: an AI licensing story that, at least in theory, offered investors more than just ad revenue.
One of the most talked-about sections of the company’s IPO filing was the $60 million content licensing agreement with Google, which was made to help train AI models on Reddit’s enormous archive of human conversation.
Reddit’s valuation may have benefited more from that detail than from years of steady revenue growth. Investors, who are still eager to purchase anything with an AI adjacency, seem to have viewed that arrangement more as a signal than as a business transaction. Reddit was no longer merely a forum. Data infrastructure was involved. That was the framing, at least.
Nevertheless, it is more difficult to overlook the underlying financials than the hype. In its nearly two decades of existence, Reddit has never made a profit; by the time it went public, its total losses were approximately $717 million. From $229 million in 2020 to $804 million in 2023, revenue increased significantly, but losses continued to compound at the same time. Reaching Wall Street’s expectations is a real task, not a symbolic one, for a company that was under Conde Nast’s control for the majority of its existence and only started actively pursuing revenue in 2018.
Reddit’s case is genuinely intriguing because of its true nature. Every month, about 76 million active users from about 100,000 different communities visit the platform. The most striking recent example is the WallStreetBets community’s involvement in the GameStop episode of early 2021. People go there to find product recommendations, process grief, debate politics, and occasionally move markets. It is difficult to create that level of engagement. Additionally, it has historically been difficult to make money off of it without upsetting the creators. For years, Reddit has tread carefully on that line.
It makes sense that cautious investors would consider the leadership history as an additional layer of complexity. After leaving in 2009, co-founders Steve Huffman and Alexis Ohanian returned years later. After Ellen Pao resigned in 2015 due to a user revolt that, by most accounts, was directed at the wrong person, Huffman was appointed CEO. In a 2021 filing, he stated clearly that the company had “scars, learnings, and policy updates” as a result of those incidents. Such candor is uncommon and, depending on how you interpret it, either illuminating or comforting.
The aftermath of the Reddit IPO actually demonstrates that Wall Street’s desire for attention-grabbing companies is still present, conditional, and occasionally illogical. The pop on the first day was genuine. The more accurate way to determine Reddit’s true value is probably to see if the valuation holds when earnings reports begin to come in. Before trading even started, Reena Aggarwal of Georgetown University stated clearly that the next earnings call would be the first real measure. That is still the case. Reddit was well received by the market. The business must now appear for the follow-up.
