How Reddit's IPO Will Impact the Market

Reddit has officially gone public. Uh, the social media company made its debut on the New York Stock Exchange on Thursday with a share price of $34, the high end of the targeted, uh, range. Its share price puts Reddit's value at around 6.4 billion, which seems teeny-tiny these days, which is what they were aiming for, but, uh, below the $10 billion valuation from a private fundraising round in 2021. We're recording this as trading is getting underway. H- how do you think it'll go?

Well, uh, I voted with my wallet. I'm trying to get shares here. So, look, this is... If, if JP Morgan and Goldman Sachs, uh, uh, and Morgan Stanley could do this, this is what they would do. They themselves would find $100 million each and buy into this, buy into the, uh, first trades and try and send the stock soaring. Because the IPO market has been in a deep thaw for two years. It's been some of the slowest two-year period, 24-month period in several decades. Yesterday, the, the landing lights got lit by, um, this company, this company Astera. If a popular, not a popular, but a well-known consumer internet brand, Reddit, gets a big pop, we're back in business, baby. And the amount of money that flows from the IPO market, in terms of downstream, secondary, green shoe, follow on wealth management, all the shit, they create so much fees.

Let me push back here. This is an advertising company. This is not an AI company, first of all-

Agreed.

... which is a little different. Um, just for people to be aware, Reddit sold... I mean, it's almost fully an advertising company, completely. $800 million in advertising. It's very small. It's like a Snapchat kind of situation. Um, I think Snapchat's a lot bigger, actually. I think double even, I'm pretty sure. Um, Reddit sold, just for people that are aware, uh, just above 15 million shares in the offering, and existing shareholders sold another close to seven million shares, getting some, taking some money off the table, I think, right away. Um, and, uh, you were talking about Astera, A-S-T-E-R-A, for people who, who don't know. Um, but it's a dry spell. Um, uh, there has been a dry spell in these things. Uh, uh, just so people are aware, Reddit's revenue was $804 million last year. Uh, it rose from $667 million, but it lost 90, uh, million dollars in... almost $91 million, where... And the year before, it lost $159 million. Um, it's trying to get into other businesses, like data licensing. Um, it- it get, it got a r- just around $66 million from Google arou- in, uh, data licensing deals, um, to train these AI models. It's, it, it want, it got, uh, m- a query from the Federal Trade Commission for this. It's also, Sam told m- um, excuse me, Sam, um, Steve told me he was, uh, you know, they're looking at commerce and other businesses besides advertising. Um, uh, and they think they have a good advertising story 'cause it's safer because of contextual advertising, and also because you can reach individuals. This is decentralized content moderation and decentralized groups. Um, I, I don't know. I, I, I think it's an advertising business. So, I think I, I... And also, the last thing is they're famous for WallStreetBets, uh, which... And, and in WallStreetBets, they were betting they were gonna short the stock. So, there's a meme possibility here too, that they will, that there's, that the people that are on the site will try to work against it. And then last thing, and moderators, some of the mods are getting shares. Um, and not all of them liked it necessarily, 'cause this is a very, um, noisy, noisy company among the people who run it. It's run by people who are volunteers and stuff. Anyway, it's a lot happening here. I mean, you still think 'cause it's an ad business, I mean, and you know the ad business, that it'll, it'll be, it'll, it'll mean as much.