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Reddit Goes Public: Stock value increases by 48% in initial public offering, bringing company's worth to $9 billion
Reddit's initial public offering was launched on the New York Stock Exchange, establishing the firm's worth at more than $9 billion. The social media site's shares rose by 48 per cent on its first day of trading, moving from $34 to $50.44 per share.
Reddit's stocks skyrocketed by 48% on its first day of trading at the New York Stock Exchange, ending at $50.44. The jump followed Reddit setting its stock price at $34 each, close to the highest projected range, pushing the company's value to more than $9 billion.
The initial public offering, considered one of the most significant from a social media platform, put forth 22 million shares. Notably, some of these shares were offered to Reddit's user base in an unusual step, but the exact number of shares acquired by users hasn't been revealed.
Established almost twenty years ago, Reddit has grown to be one of the world's most frequented websites, with a user base surpassing 73 million by December 2023. Nonetheless, the firm's decision to go public has once again stirred up debates about its capacity to generate revenue from its platform, mainly known for hosting user-created content and conversations free of charge.
Even though Reddit has made attempts to draw in advertisers with improved visuals in 2017, it has found it challenging to become profitable in its initial twenty years. However, a possible solution appears to be emerging, focused on utilizing artificial intelligence (AI) models. Companies such as OpenAI are demonstrating a readiness to purchase access to Reddit's extensive dataset to boost their AI abilities, with Google allegedly spending $60 million for this kind of access. Furthermore, Reddit has managed to cement licensing agreements worth over $200 million for the coming years.
The possibility of making a profit also brings forth regulatory investigations and legal issues. Reddit is currently under investigation by the US Federal Trade Commission (FTC) concerning its data licensing methods, and it has also been accused of patent violation by the mobile phone titan Nokia. Furthermore, Reddit's filing with the Securities and Exchange Commission (SEC) points out its user base as a possible risk, emphasizing that its business model heavily relies on content and engagement generated by its users.
Even though Reddit has faced occasional criticism from users due to modifications in its platform, such as the 2023 blackout, its supremacy in the social media world is mostly unopposed. Although some users continue to be unhappy, the lack of a major rival allows Reddit to maintain a steady market value linked to its user community.
(Incorporating information from various sources)
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