Reddit sees boom in stock after first day of options launch
Reddit enjoyed a jump in the price of its shares on Tuesday (26 March) in the continuation of a strong launch of options on the stock.
An 11% increase and a current price of $67.5 looks set to add more than $1 billion to the market value of the social media platform, whilst it is also on track to double the $34 IPO price.
Reddit is a San Francisco-based site that combines elements of social media, message boards, and news aggregation. It was founded in June 2005 by Steve Huffman and Alexis Ohanian, who sold the platform to Condé Nast the following year. Huffman left the company in 2009 before returning as CEO in 2015.
The company is seeking a valuation of up to $6.4 billion in its flotation on the New York Stock Exchange.
Reaction to the Reddit stock price boomJeremy Goldman, a senior director of client briefings at Emarketer, formerly Insider Intelligence, spoke on the early trading and returns on the new stock.
“More bullish investors have bought options in Reddit, which is part of its early stock market success in its first full week of trading,” he said.
Goldman added, “From my estimates, about 90,000 options have changed hands, possibly more.”
The options launch enticed significant bets on the stock on Monday, closing up around 30% and crowning Reddit as the top percentage gainer on the NYSE.
If the current trajectory remains, the company is well-poised to smash through its $6.4b target and also the $10 billion valuation Reddit received in a 2021 private fundraising round.
Lo Toney, founding managing partner of Plexo Capital and Reddit shareholder told CNBC that Reddit’s debut was “a positive sign not only for the company, but I think also the tech industry and what it might mean for future IPOs.”
“One thing we know with certainty is that there (was) a lot of investor appetite during the roadshow for Reddit, and we see that it’s continuing to hold up well.”
Toney added, “Clearly the market is signaling there’s an appetite for more companies to come to the public markets.”
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