‘Sober’ IPO Market Is Over, Says Top Morgan Stanley Banker

Many of the big investors weighing Reddit’s initial public offering weren’t convinced by the company’s pitch in the weeks leading up to the listing, fretting about the firm’s lack of profits or uncertainty around big licensing deals for its data. But the doubts dissipated for many by the time Reddit’s bankers closed the deal, which valued the company richly compared to some competitors.

Reddit’s strong performance—as of Monday afternoon, its stock was up 63% from its IPO price—followed a bumper IPO by fabless semiconductor startup Astera Labs, whose stock has soared. That should perk up the hundreds of other venture-backed companies that have been waiting for a more forgiving market to go public. Colin Stewart, Morgan Stanley’s global head of technology equity capital markets and the banker who took Reddit public, said recent IPOs have sent a signal that investors are more open to taking risks on relatively unproven companies.