Reddit CEO Steve Huffman stands on the ground of the Latest York Stock Exchange (NYSE) while ringing a bell on the ground setting the share price at $47 in its initial public offering (IPO) on March 21, 2024 in Latest York City.
Spencer Platt | Getty Images News | Getty Images
Reddit’s first stock rating amongst analysts was a hold. However the rally continued anyway.
The shares climbed 8.8% on Tuesday to shut at $65.11. They’re now up 92% since debuting on the stock market last week under ticker symbol “RDDT.” It was the primary social media IPO since Pinterest’s offering in 2019.
Reddit and existing shareholders sold 22 million shares within the offering, raising almost $750 million combined. Over 35 million Reddit shares modified hands on Tuesday, essentially the most since 48.7 million shares were traded on the corporate’s opening day available on the market.
Investors continued to snap up Reddit shares despite Latest Street Research issuing a neutral rating on the corporate “after the stock goes to the moon,” analysts wrote in a note published on Tuesday.
The analysts said they would not change their $54 price goal, and that they expect “volatility into the primary earnings report.” The corporate hasn’t scheduled its announcement yet, but Latest Street said it’s going to likely are available May. Insiders are forbidden from selling shares until the post-IPO lockup period expires 180 days after the offering.
The Latest Street analysts wrote that “an OpenAI data licensing win is baked into the stock,” implying investors see Reddit benefitting if it inks a licensing take care of the ChatGPT maker. Investors expect such a deal “to be added soon,” they wrote, considering OpenAI CEO Sam Altman owns a big stake in Reddit.
The corporate’s market cap has swelled to about $12.3 billion as of Tuesday’s close. Altman’s shares are value almost $800 million.
Although Reddit’s core business is internet marketing, the corporate has pointed to data licensing as a possible big revenue source. It also recently entered into an expanded partnership with Google, allowing the search giant to access more Reddit data to coach its AI models.
Nonetheless, the Federal Trade Commission is conducting an inquiry into Reddit’s data licensing business.
“At first blush, it seems relatively benign, nevertheless it may very well be an overhang,” the Latest Street analysts wrote, noting that the “FTC inquiry could slow the pace of latest deal signings and will definitely require attention and time dedicated to addressing the inquiry.”
Meanwhile, some Reddit users took to the corporate’s subreddits on Tuesday to debate the stock rally. Plenty of users, together with certain company employees and their members of the family, were a part of Reddit’s directed-share program and never subject to a lockup period, allowing them to collectively make hundreds of thousands of dollars by selling after the pop.
One Reddit user with the username “bkarp00” wrote, “Looks like all the fast money IPO people out are helping it rally today with less people willing to sell at these levels,” referring to shareholders who imagine that Reddit’s stock will proceed to extend in value.
User “IrishRun” wrote, “I have been kicking myself for not buying more shares, but there was no guarantee I’d have received the requested number after which I’d probably still be wishing I’d bought more.”
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