Snoo, its mascot, looks like a friendly teddy bear, but the antenna sticking out of its head is a reminder that it's an extraterrestrial. A status that hasn't troubled its parent company's stock market success. On Thursday, March 21, the social media company Reddit made a spectacular debut on the New York Stock Exchange. Its share price rose 48% on its first day of trading, valuing the company at $9.5 billion (€8.7 billion). Not bad for a company that in its 19 years of existence has never earned a cent. In 2023, it lost a further $91 million on revenue of $804 million.
That's how it is with extraterrestrials. We don't know how they do it, but they have superpowers. An even more powerful entity is Trump's social network, Truth Social. According to CBS News, as of 2022, it hadn't generated any advertising revenue, but that hasn't stopped it from trying to go public, thanks to a special purpose acquisition company (SPAC) that's already listed.
According to the Financial Times, this project, postponed several times, could enable the former US president to recover a whopping $3.5 billion. It's a dream come true for the Republican candidate, who is loaded with fines and damages, but it will come too late to help him pay his $500 million penalty for fraud in New York.
Steve Huffman's venture is less stellar. He will pocket $17 million from Reddit's initial public offering (IPO), a company he co-founded in 2005. And it will be distributing two million shares to the most loyal members of its community. Reddit claims 73 million subscribers, who access nearly 100,000 thematic communities. That's less traffic than Facebook or even Twitter, but it's a loyal following that spends long hours on the network. Very strong in sports, video games, and science, the network gained worldwide notoriety when it hosted candidate Barack Obama in 2012 for a live broadcast ("Ask me anything") that crashed the servers.
To justify the valuation, lowered since its first attempt at $10 billion in 2021, the network explains that it will monetize its business by selling data, paid services, and advertising. A commoditization that doesn't sit well with the network's pioneers, who are attached to the platform's open, non-commercial model. A return to planet Earth which is already exciting investors. It's an audacious gamble, but in the face of Trumpian financial acrobatics, Reddit's little Snoo ends up looking like the responsible one.