Reddit's stock went down on its second day of trading Friday, losing some of the big gains from the platform's first day.
Around midday, the stock dropped by $1.10, or 2.1%, to $49.33. The wider markets also had slight decreases, with the S&P 500, the Nasdaq, and the Dow Jones Industrial Average all slipping by less than 1%.
The decline occurred after Reddit's stock, traded as RDDT, surged by 48% on its first day on the New York Stock Exchange. closing at $50.44 after reaching $57.80 during the session.
The initial public offering price was $34, and some investors who bought in at that price likely sold to take advantage of those gains, causing the stock to drop slightly.
Reddit reserved up to 1.76 million of its 15.3 million IPO shares for some of its most active 76 million users. Normally, IPOs are bought by mutual funds, hedge funds, and other institutional investors who were able to buy the remaining shares.
The company also has some well-known investors, particularly including OpenAI CEO Sam Altman, who owns 12.2 million shares of Reddit stock, as reported by The Associated Press, according to the company’s IPO disclosures., citing the company’s IPO disclosures.
Reddit’s CEO Steve Huffman earned more than the heads of Meta, Pinterest, and Snap combined, making a hefty $193 million in 2023.
It was the largest stock offering from a social media company since Pinterest debuted in 2019. Its success gives a boost to the IPO market, which started the year in the doldrums. The Wall Street Journal reported that the solid gains could encourage other companies to take the plunge and go public.
The run-up pushed the value of the San Francisco-based Reddit to about $9.5 billion, according to Semafor. It was valued at about $10 billion after its last private fund raising round in 2021.
Reddit’s IPO came one day before the shareholders of Digital World Acquisition Corp. approved its planned merger with Truth Social parent Trump Media and Technology Group. Digital World shares dropped as much as 7.5% after the results of the vote were announced, but then bounced in choppy trading. The stock was down $1.11, or 2.6 %vat $41.70.
