Reddit’s Stock Debut Is Coming. It May Not Usher In the Next IPO Wave

Social media darling Reddit is set to make its debut on Wall Street later this week, but even if its initial public offering has a red-hot pop after it opens, some are holding out for bigger, better unicorns to file their paperwork before declaring that the IPO market is legitimately back.

Reddit isn’t a bellwether, said Greg Martin, co-founder of Rainmaker Securities, a brokerage firm that specializes in private company investments. Martin notes that the company faces a lot of competition in social media and that its proposed valuation of $6.4 billion, based on the $34 a share top of its price range, seems like a “stretch”…even though it was valued at $10 billion in a private round of financing a few years ago.

Martin said that $5 billion makes more sense, adding that Reddit is likely to be as cyclical a stock as other midsize social media firms, such as Snapchat and Pinterest.

“It’s good that Reddit is going public. But it’s not the most exciting company. The growth has been more pedestrian lately and it’s an advertising revenue driven firm,” he said...Read Full Article