RDDT: Reddit Stock Wobbles in 9% Slide a Day After Blowout IPO Chalks Up Super Gains

Buzzing social media platform is already feeling stomach-churning volatility and it hasn’t even been three days of public trading.

Key Points:

• Reddit drops 9% a day after IPO.
• Growth prospects are challenged.
• How long can the hype buoy prices?
• Reddit stock RDDT pared back a chunk of its IPO gains on Friday after investors revisited their bets in a more sober state of mind. The hype around flotation bumped shares by 48% in Reddit’s trading debut, valuing the company at $9.5 billion. The next day shares got knocked by a 9% decline to close the session at $46 a pop.
• The successful launch of shares was a sign that investors were feeling optimistic about tech companies entering the public markets. Even more, Reddit is the first social media company to issue shares since Pinterest floated its IPO back in 2019. Still, it’s worth noting that Reddit’s public market kickoff comes with the burden of convincing investors it’s got long-term value and bright prospects.
• Despite the initial buzz that boosted shares, Reddit’s fundamentals are telling a different story. The popular chat-room website and the birthplace of meme stocks has never turned a profit in its 19 years’ existence. It picked up $804 million in revenue last year, but slipped into a loss of $91 million. All the while chief executive Steve Huffman pocketed $193 million in various forms of compensation.