This week, Reddit, the owner of the social network of the same name, conducted an initial public offering (IPO) on the New York Stock Exchange at a price of $34 per security. The first day of trading was successful for the company, as by the close of the exchange, Reddit's share price rose 48% to $50.44 per share.
According to experts, investor interest in IPOs of promising but unprofitable companies is declining. Reddit, which has not made an annual profit since launching in 2005, has attracted investors by positioning its platform as a tool for training large language models. So, last month, Reddit signed an agreement with Google worth about $60 million per year, under which the IT giant will be able to train its AI algorithms on the content of the Reddit platform.
While Reddit still gets most of its revenue from advertising, the company says it can grow through artificial intelligence algorithms. “We are essentially a growing company. Achieving our mission means we want to grow our user base and community,” said Jen Wong, Reddit's chief operating officer.
During trading on the New York Stock Exchange, Reddit shares began trading at $47 per share. By the end of the auction, their value increased to $50.44 per piece. After the IPO, Reddit's market value was $6.4 billion, while in 2021 the company was valued at $10 billion. Shareholders sold 22 million Reddit shares, raising a total of $748 million.
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