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Reddit Rises 48% in First Day of Trading

By Mike Isaac and Lauren Hirsch</p><p>new york times</p><p>

SAN FRANCISCO – Reddit shares rose 48% Thursday in their first day of trading, in a sign of investor eagerness that set the stage for more tech companies to reach the stock market this year.

Shares began trading on the New York Stock Exchange at $47, after pricing at $34 on Wednesday in the social media company’s initial public offering. The stock continued to rise before closing at $50.44. The pop put Reddit’s market capitalization at about $9.5 billion, slightly below the $10 billion it was valued at in the private markets three years ago.

The listing is a milestone on a long road for Reddit, which was founded in 2005 in San Francisco. The site is best known for its message boards, where users can congregate on forums known as subreddits to research and discuss everything from parenting to power washing to Labrador retrievers. Over the years, the company struggled through many of the issues facing the largest social media firms, such as how to moderate speech and make money.

“The process of becoming a public company has made us so much better,” Steve Huffman, Reddit’s CEO, said in an interview Thursday morning. “We’re shipping better products, faster.”

Reddit’s IPO was not guaranteed to be a success. The company is growing, but it is unprofitable and has faced questions about the strength of its advertising and data-licensing businesses.

Reddit’s first day of trading was also a test of whether it would become a “meme stock,” which is when a company attains a herdlike following across social media and its stock can be promoted or pilloried for the financial gain of its followers. One subreddit, WallStreetBets, has developed a powerful role in the financial markets as a promoter of meme stocks, serving as a place where traders coalesce, trade tips and talk.

In its IPO, Reddit offered up to 8% of its shares to Redditors, the people who regularly use the site, an unusual move to reward some of its most loyal users. On Thursday, commenters on WallStreetBets actively discussed Reddit’s stock, comparing how many shares they had, sharing their plans for buying and selling, and rooting for or against the stock in flippant, sometimes profane terms.