Reddit's strong IPO debut, along with Astera's successful public offering, could change the current market dynamics and narrative around going public. Despite a decrease in tech valuations since the 2021 asset bubble, the successful IPOs of these two tech companies could encourage more tech firms to go public. However, many tech IPOs from 2021 have lost value since their debuts. Despite this, the recent success of Astera and Reddit may encourage more tech companies to consider going public.
Key takeaways:
- Shares of Reddit opened at $47 per share and quickly soared to around $55, up about 60% from its IPO price of $34 per share, before stabilizing at around $50 a share.
- Despite being unprofitable with net losses of more than $90 million last year, Reddit's significant AI story and its sale of $203 million worth of contracts to AI companies for data access could excite investors about its future.
- The FTC has opened an inquiry into Reddit’s plan to license its user data to train AI models, which could impact the company's stock performance.
- Reddit's strong IPO debut, along with Astera's successful public offering, could potentially shake up the current market dynamics and narrative surrounding going public, indicating that the waters are warm for tech companies that can show growth and have something to say about AI.