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