Reddit shares began trading on the New York Stock Exchange on Thursday, ushering in a new era for the social discussion site as a public company.
The site, which had originally priced shares at $34 (€31) each, saw this figure rise to $47 (€43) as the market opened.
Later in the day, eager investors then pushed up the shares to $57.80, although the closing price dipped slightly to $50.44.
The demand surrounding Thursday’s offering is a welcome sign for the IPO market after two lacklustre years of trading.
According to S&P Global, there were just 370 IPOs launched globally in the last three months of 2023, the poorest fourth quarter result since 2012.
Reddit's move to go public will also test the company’s ability to overcome a nearly 20-year history marked by uninterrupted losses.
The company has never made an annual profit, recording a loss of $91 million (€83 million) last year.
"Reddit’s successful IPO represents a return to pre-pandemic days when investors were happy to lap up shares in loss-making companies if they offered a compelling narrative," said Dan Coatsworth, investment analyst at AJ Bell.
On Thursday, Reddit’s closing price gave it a market value of $9.5 billion, above the $6.4 billion implied by its IPO price, but it is still a small player next to other social media firms.
Part of Reddit’s share success story is its link to artificial intelligence, added Dan Coatsworth.
Reuters reported last month that Reddit has allegedly struck a deal with Google to allow AI models to be trained using its content, a deal that will allow Reddit to diversify its revenue streams.
The IPO has also been attracting attention because of Reddit’s decision to give users of its platform the chance to buy stock, although IPOs are usually only available to institutional investors.
Reddit has set aside up to 1.76 million of the 15.3 million shares it is offering for users of the site.
Some analysts are nonetheless concerned that the frenzy surrounding the IPO will result in the listing becoming "meme stock", and a number of Reddit users are saying they will short sell the securities.
This means that they will buy expensive shares and immediately sell them, hoping the price will fall so they can buy them back for a lower price.
