Reddit IPO

Reddit stock will be traded on the New York Stock Exchange under ticker RDDT, with an initial offer of 22 million shares with a target price ranging between $31 to $34 a share. However, 1.76 million shares have been set aside for the website’s loyal users and moderators. The lock-up period will not apply to these shareholders, so they won’t need to hold their stock for a minimum of 6 months. Some analysts and Reddit itself warn, that this may cause a volatility in stock. The company hopes to earn up to $750 million from the IPO.

With its unique concept, Reddit distinguishes itself from other platforms like Facebook, Instagram, or LinkedIn. It combines traditional social media feed with community-based forums, where each community has its own topic. Reddit communities are known for “meme stocks”, organising market rallies to artificially manipulate stock prices. One such example from 2021 is GameStop, the underperforming videogame store company. Reddit users started buying GameStop stocks, when the price was expected to drop. The rally caused chaos on Wall Street, resulting in many institutional investors losing their money due to sudden price spike. *

Source: Investing.com*

Meta is still the strongest player

As of March 2024, Meta, the creator of Facebook, was the 7th largest company in the world with a market cap reaching $1.26 trillion. In 2023, Meta reported record-breaking earnings which exceeded all expectations. Annual revenue was at $134.9 billion with almost 16% year-on-year increase and net income posed at $39 billion which saw 69% increase from $23.2 billion in the previous year. The company focused more on its already established platforms, investing heavily in AI development and saw a significant inflow of advertising revenue mainly from Chinese companies. Facebook faced a slowdown in user growth in recent years. Some analysts warn, Meta’s sources of income should be more diverse, and the growth might be unsustainable in the long run.

Instagram continues to grow

Instagram revenue in 2023 was $60.3 billion which makes it nearly 44% of the total revenue of Meta. Instagram is now one of the company’s strongest assets. Even though this share has grown substantially since 2015, it stalled in the last 3 years, mainly due to economic challenges, the company faced. However, Instagram revenue also continues to grow along with its user, which have reached more than 2.1 billion. Last year, Meta introduced a new platform Threads, connected to Instagram accounts which was meant to compete with X (formerly Twitter). In addition to traditional posts and likes, users can share through Story, watch short videos called Reels, use hashtags, targeted ads or Instagram Analytics and many more features what Instagram offers. Ending last year, Threads is now available also for European users in compliance with EU’s Digital Markets Act, a regulation aimed at big tech business practises and creating even playing field.

source: Investing.com*

LinkedIn - A social network for business

Another significant social media platform offers something different. LinkedIn is focused on formal interaction, building of professional identity and content. It has served companies and individuals for their marketing, jobs advertising, educational purposes, and overall information trade. This has also been its main source of income along with premium memberships. LinkedIn targets different types of users than Facebook or Reddit and distances itself from the likes of TikTok or Instagram. It also doesn’t have much competition in its own field. LinkedIn is far more resilient to fraud than its counterparts thanks to its verification system. In times of advanced AI and fake accounts, this feature is more important than ever and could reinforce the idea of growth in the future. LinkedIn has more than 1 billion users and is available in 200 countries. In the last 7 years, it’s had stable user growth, compared to Facebook. In 2016, LinkedIn was acquired by Microsoft for $26 billion with its 430 million users base, the company’s largest acquisition at that time and one of the largest in technological sector. LinkedIn generated revenue of $15 billion in 2023. The platform never lost its identity, distinct brand or culture, something Microsoft pledged to at the time of the purchase.

Source: Investing.com*

Social media have been part of people’s everyday lives for some time now. Ever since Facebook conquered the world, other companies such as Microsoft have joined this market with their own platforms and approach, some more successful than others. They were forced to adapt to the market and online space, that was changed forever. Reddit also has a long history, benefiting from popularity of forum websites in 2000s and since then it has grown and evolved thanks to its users and communities which will be now rewarded with an opportunity to participate financially.

Warning! This marketing material is not and must not be understood as investment advice. Data relating to the past are not a guarantee of future returns. Investing in foreign currency may affect returns due to fluctuations. All securities transactions can lead to both profits and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements do not guarantee future performance. CAPITAL MARKETS, o.c.p., a.s. is an entity regulated by the National Bank of Slovakia.

Sources:

https://www.cnbc.com/2024/03/11/reddit-to-raise-nearly-750-million-in-upcoming-ipo.html

https://www.thetradenews.com/the-reddit-revolt-gamestop-and-the-impact-of-social-media-on-institutional-investors/

https://companiesmarketcap.com/meta-platforms/marketcap/

https://finance.yahoo.com/news/heres-key-reason-meta-platforms-102900025.html

https://www-ft-com.ezphost.dur.ac.uk/content/454ec355-a4b8-4270-b116-52d85d6a10bd

https://www.businessofapps.com/data/instagram-statistics/

https://www.theverge.com/2023/12/14/23953986/threads-european-union-launch-eu-meta-twitter-rival

https://www.investopedia.com/ask/answers/120214/how-does-linkedin-lnkd-make-money.asp

https://www.engadget.com/linkedin-starts-rolling-out-new-verification-and-anti-scam-features-133539818.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAMH0YCuFoS-LRnDWR_BC7WBYU6WZ0TsC6kqB78ETpYdAx1be0B57Qe-cutNrydNilcHJxPERGN1Pj8TgKYsgmQ2tk65GwVZEBeRB8Bx1lVhKxqmOK3J47GZSMT_H1M_DwvZnzfICyWIYjA-g9LTJB0HCC3Z_A0IOtak98YlNIUd1

https://www.demandsage.com/linkedin-statistics/

https://www.statista.com/statistics/976194/annual-revenue-of-linkedin/

https://news.microsoft.com/2016/06/13/microsoft-to-acquire-linkedin/