Reddit IPO spikes, reigniting social media sector
Reddit, best known for hosting forums for users to share, discuss and vote on content, received a warm welcome on Wall Street.
Shares, which trade on the New York Stock Exchange under the ticker "RDDT," rose by more than 60% after pricing at $34, the high end of the expected range. Shares settled the session with a 48% gain to $50.44 per share. The reception is a positive indicator for the social media sector, which has been experiencing an IPO dry spell.
Founded in 2005 by web developer Steve Huffman and entrepreneur Alexis Ohanian, husband of tennis champion Serena Williams, Reddit has been backed by several marquee investors, from venture capital giant Andreessen Horowitz to China's tech behemoth, Tencent Holdings.
Huffman, who faced backlash from users over his $193 million pay package, defended his compensation earlier this week.
"I'm glad this question was asked because there's been a lot of commentary on this topic," Huffman said in a Q&A video on the platform ahead of the IPO. "So broadly, the way my compensation works is it has salary and stock. The board evaluates my performance and sets my compensation." He also explained an extensive vesting schedule and performance-tied awards.
The company has lost money each year since its launch and has struggled to match the commercial success of rivals, which include the world's top tech giants.
"Google, Meta (including Facebook, Instagram, Threads, and WhatsApp), YouTube, Wikipedia, Snap, X, Pinterest, TikTok, Roblox, Discord, and Twitch" are all rivals, as noted in its prospectus filed with the Securities and Exchange Commission.
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Some advertisers have balked at many Reddit users' focus on niche content and the platform's approach to content moderation. The platform relies on users who volunteer to moderate the content posted on Reddit forums.
FOX Business' Eric Revell and Breck Dumas contributed to this report.