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Reddit has officially gone public uh the social media company made its debut on the New York Stock Exchange on Thursday
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with a share price of $34 the high end of the targeted uh range its share price puts Reddit value at around 6.4 billion
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which seems te tiny these days which is what they were aiming for but uh below the10 billion valuation from a private
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fundraising round in 2021 we're recording this as trading is getting underway H how do you think it'll go
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well I voted with my I'm trying to get shares here so look this is if if JP Morgan and
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Goldman saxs uh uh and Morgan Stanley could do this this is what they would do they themselves would find $100 million
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each and buy into this buy into the first trades and try and send the stock soaring because the IPO Market has been
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in a deep thaw for two years it's been some of the slowest 2-year period 24mth
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period in sever decades yesterday the The Landing lights got lit by um this company this company
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estera if a popular not a popular but a well-known consumer Internet Brand Reddit gets a big pop we're back in
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business baby and the amount of money that flows from the IPO market in terms of Downstream secondary green shoe
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followon wealth management all the they creat so much fees let me push back here this is an advertising company this
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is not an AI company first of all which is a little different different um just for people to be aware Reddit sold I
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mean it's almost fully an advertising company completely $800 million in advertising it's very small it's like a
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Snapchat kind of situation um I think Snapchat's a lot bigger actually I think
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double pretty sure um Reddit sold just for people that we are just above 15 million shares in the offering and
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existing shareholders sold another close to 7 million shares getting some taking
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some money off the table I think right away um and uh you were talking about estera a s t r a for people who who
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don't know um but it's a dry spell um uh there has been a dry spell in these
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things uh just so people aware reddit's Revenue was $84 Million last year uh it
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Rose from $667 million but it lost 90 uh million in almost $91 million where and the year
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before lost $159 million um it's trying to get into other businesses like data licensing um
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it it get it got just around $66 million from Google in a data licensing deals um
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to train these AI models it's it it want it got a a query from the Federal Trade
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Commission for this it's also Sam told me I me excuse me Sam um Steve told me
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he was uh you know they're looking at Commerce and other businesses besides advertising um uh and they think they
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have a good advertising story because it's safer because of contextual advertising in and also because you can
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reach individuals this is decentralized content moderation and decentralized groups um I don't know I I I think it's
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an advertising business so I think and also the last thing is they're famous
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for Wall Street BS uh which and and in Wall Street bets they were betting they were going to short the stock so there's
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a meme possibility here too that they will that there's that the people that
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are on the site will try to work against it and then the last thing moderate some
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of the mods are getting shares um and not all of them liked it necessarily because this is a very um noisy noisy
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company among the people who run it it's run by people who are volunteers and
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stuff anyway it's a lot happening here I mean you still think because it's an ad
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business I mean and you know the ad business that it'll it'll be it it'll
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mean as much so there's Reddit the specific company its performance and how how it performs the market and then
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there's a larger question about what what it means the IPO this morning of Reddit to the larger market so let's
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talk about Reddit you're right it's an ad business they basically have a series
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of boards and redditors that manage those boards they have unbelievable traffic but they haven't really figured
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out they don't have the ad stack in the business model to really monetize it the
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way other companies have run it it's an $800 million business not a big business
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it grew 20% last year it's still losing money it's going out or it's priced at
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about eight times revenues which draws sharp relief between as you pointed out an ad-based business and an AI business
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the question surrounding Reddit is the following they have the worst monetization of any of any platform that
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gets this kind of traffic I think meta gets something like 30 to 50 times the monetization per person on the platform
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as Reddit now it's like my dad told me I remember my dad telling me this when he
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was trying to test whether I'd be a good salesman he's like a Salesman goes over
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to Africa and this Mark the time this was the 70s and he comes back and one salesman goes he's a shoe salesman one
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salesman comes back and says terrible Market Force nobody wears shoes here another salesman goes over and comes
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back and says this is amazing nobody has shoes so the question is is reddit is the fact that they have the worst
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monetization given the traffic an an incredible opportunity if they figure that out or is it a company that's never
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been able to figure it out and is going to go nowhere that's the question but at
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$65 billion dollar a lot of people are about to take I believe that bet now the bigger issue here is what it means for
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the market would you buy Reddit I don't buy into these things so would you buy
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I'm trying to yeah yeah oh you are oh you are I'm sorry that's correct so
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because you think that it's undervalued in that regard um because I don't think
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people think that the that the data stuff is going to be the big money maker at all the data stuff and no and the
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Commerce stuff is absolutely nent and like I sell more t-shirts than they do that kind of thing um so you think the
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$34 price share is what oh too much too little I'm buying for two reasons um okay uh the first is this
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could be I think this I think there is a ton of pent-up demand in 2021 um there were um uh 397 IPOs and of
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those 397 IPOs because a ton of them were spacks and and caught up in the man Mania eight out of 10 of them
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82% of them are trading below their IPO price and the market feels burned and jilted so as a result in 2023 there were
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only um 108 IPOs uh the reason I'm investing in this is two reasons one um I think that
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essentially uh it's a global brand and two it's the most traffic site in
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America that isn't know by alphabet and it's trading all of this set against a a
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valuation of $6.5 billion there are real issues as you pointed out with this company they have
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they have not yet figured out a way to monetize anything resembling the fire hose of traffic they have right I it's
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not that big 500 million users 76 he he was focused in on the daily users 76 million and that they have this
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dispersed group of people so advertisers could reach if you're in the skiing area
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and it's not ugly they've really cleaned it up quite a bit compared to a Twitter
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where everyone's in the same pile of crap um you know everybody's in the same
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feed or whatever but go ahead sorry but this I mean there there's there's a lot
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to not like about this company they haven't figured out monetization when I go on the site it feels like you know
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lyos or alav Vista called and wants their UI back I don't think it's very
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elegantly done but for $6.5 billion dollar a company that is if you type in most traffic sites in the US it goes It
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goes Google it goes YouTube and then it's Reddit and so and I and also I think there's so much money on the
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sidelines hoping to get back into the IPO Market but if Reddit comes out at a healthy pop We're Off to the Races again
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Cara you're going to see a ton of companies file in the greed glander and the animal spirits are going to get
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going again so Reddit is actually Reddit is more important to investment banks in
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the IPO ecosystem and the broader Market I would argue than almost any company in
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a while this IPO has much bigger meaning and ramifications than just what shareholders of Reddit are going to
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Garner in the midst of this of of all these things that are happening uh two things interesting uh one of the big
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Winners could be K Nas parent company Advance who stake in Reddit will be worth around 1.4 billion I don't think
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they can sell though maybe they're selling a little bit of shares in the in the I they might be among those sers um
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that's they made a $10 million investment for K Nas to buy Reddit in 20 uh 2006 and then they spun it out again
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so you know this company got spun bought in and then spun out uh it's been through a lot in in the many years
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second thing um Reddit had to reveal the FTC is conducting an inquiry tied to the
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company's deals to uh to license data as we said and then also uh Reddit along
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with YouTube and meta also has been ordered by New York State judge to face a lawsuit tied to that 2022 racially
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motivated shooting in Buffalo the lawsuit claims the platforms helped radicalize the shooter and prepare him
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for an attack of course the Supreme Court found differently when it was a Google case so I'm not sure this will go
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anywhere um so there's all those things hanging around um so what do you is it
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will this set it off or will something else set off the IPO Market because instacart didn't do very well others
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didn't do very well you think this will set it off like I said the table's been
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set with a stero Labs up 72% if a big consumer Internet Brand Reddit comes out at a healthy pop markets the IPO Market
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is back in business Scott Galloway here coming in with an update uh since we've Saed
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Reddit has begun trading the stock opened at 47 buck and at its peak the company had a market cap of get this 11
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billion and uh also ended up closing up I think around 45 or 50% I would argue that um essentially this is enormous for
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the markets that this has turned the IPO Market from sort of like blinking yellow
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to to you know illuminant Green the IPO Market the animal spirits I think are back in some estera Labs kind of
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illuminated the runway yesterday and this big consumer Internet Brand Reddit landed the plane with a huge pop today
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uh this is big for the markets it's actually the the bigger part of the news
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here isn't a consumer Media company uh up whatever it was 45 or 50% the bigger
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story here is the IPO Market I believe is back the animal spirits are back John cholta is on the Dance
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Floor