Reddit’s Big Winner Bets That The Best is Yet to Come

Anyone who was thinking of taking their company public this year must be feeling more upbeat today. Shares of Reddit, the newest social media firm to go public, finished the week up 35% from the company’s IPO price, having lost only a bit of Thursday’s opening-day pop on Friday. Meanwhile, shares of Astera Labs, an artificial intelligence data center that went public a day before Reddit, are now up 94% from their IPO price. With the market rallying to new highs, this has turned out to be a great time for IPOs, which should prompt a few more companies to get off the sidelines. 

Astera’s rally isn’t surprising, given how much its business is tied into AI (for more, see here). Reddit’s performance, though, is surprising and suggests that investors have bought into the company’s pitch that it will participate in the AI-driven content licensing boom, as well as its hopes for advertising. Investors also may have been heartened by the fact that no major shareholder—including the biggest, the Newhouse family’s old-media conglomerate, Advance Publications—sold stock in the offering. The only sellers were current and former staff, including CEO Steve Huffman.