Shares of Reddit rose 30% to start the week following the social media company's IPO

Reddit shares rose 48% on the first day of trading on the New York Stock Exchange. A number of moderators and users, known as Redditors, earn millions of dollars as a group. They, along with their friends and family, were able to participate in Reddit's IPO via the Guided Engagement Program, a model previously used by Airbnb, Rivian, and Doximity.

OpenAI CEO Sam Altman, an early Reddit investor and former board member, saw his stake in the company increase from $200 million to more than $613 million after its debut.

Reddit's IPO came the same week that data center hardware vendor Astera Labs soared 72% on its opening day on the Nasdaq. Reddit was the first major social media company to go public since Pinterest went public in 2019, and investors have been watching its performance to gauge whether the IPO market might rebound after a long lull due to rising interest rates and inflationary fears starting in 2022.

Lou Toney, founding managing partner of Plexo Capital and a Reddit contributor, told CNBC that Reddit's debut was “a positive sign for not only Reddit, but I think also the tech industry and what that might mean for future IPOs.”

“The only thing we know for sure is that there is [was] “There's a lot of investor appetite during the Reddit roadshow, and we see it continuing to hold up well,” Tony said. “Clearly the market is indicating that there is an appetite for more companies to come to the public markets.”

However, Tony said there are “other dynamics that have to happen,” including a few companies entering the public market before it is safe to say the floodgates have opened. Tony noted that some startups have raised a lot of money, so they may not be in a rush to go public and raise more money.

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“At the same time, there are cases where recent financing from the private market may be higher than what the public market accepts as a valuation for a public company,” Tony said.

Reddit had a private market valuation of $10 billion in 2021 when it raised its last funding round, according to deal tracking service Pitchbook, valuing it at about $6.5 billion based on its IPO price of $34 per share.

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