Reddit’s recent IPO has been making waves in the stock market, with shares soaring 92% since debuting last week. Despite receiving a hold rating from analysts, the company’s stock continues to rally, closing at $65.11 on Tuesday.
Investors have been eagerly snapping up Reddit shares, with over 35 million shares changing hands on Tuesday alone. The IPO raised almost $750 million, with the company’s market cap reaching about $12.3 billion.
One of the key factors driving investor interest is the potential for a data licensing deal with OpenAI. Analysts at New Street Research believe that such a deal could significantly benefit Reddit, especially considering OpenAI CEO Sam Altman’s significant stake in the company.
However, there are also potential challenges on the horizon for Reddit. The Federal Trade Commission is currently conducting an inquiry into the company’s data licensing business, which could slow down deal signings and require attention from Reddit’s management.
Despite these challenges, Reddit’s core business of online advertising continues to thrive. The company recently expanded its partnership with Google, allowing the search giant access to more Reddit data to train its AI models.
In response to the stock rally, Reddit users have been actively discussing the company’s performance on various subreddits. Some users have expressed regret for not buying more shares, while others have benefited from the stock pop through Reddit’s directed-share program.
In my opinion, Reddit’s strong performance in the stock market reflects the growing interest in social media companies and the potential for innovative partnerships in the tech industry. While the FTC inquiry presents a potential challenge, Reddit’s strategic partnerships and focus on data licensing could drive future growth and profitability. Investors should closely monitor developments in the company’s earnings reports and any updates on the FTC inquiry to make informed decisions about their investment in Reddit.
As the company continues to navigate the complexities of the stock market, it will be interesting to see how Reddit seizes opportunities for growth and addresses potential challenges in the evolving landscape of tech and social media.