Reddit IPO targets 'aggressive valuation' to sell AI story: Strategist

In Reddit's S-1 filing with the Securities and Exchange Commission (SEC), the social media platform revealed plans to raise $748 million and seeks an estimated valuation of $6.4 billion for its highly anticipated IPO debut. Rainmaker Securities Managing Director Greg Martin joins Yahoo Finance Live to discuss Reddit's recent moves to avoid becoming just another meme stock.
Martin believes that Reddit's IPO will reignite investor enthusiasm for the tech sector. While he considers the IPO's valuation to be "pretty aggressive," he notes that Reddit is "clearly trying to sell an AI story." The company has expressed intentions to monetize its data by selling it to large language models and recently struck a deal with Alphabet (GOOG, GOOGL), aiming to "differentiate themselves" from being solely a media platform.
Notably, Reddit has set aside nearly 1.8 million shares for its users, a move that Martin believes could pose challenges. Martin suggests that this allocation is likely a strategic move by Reddit to incentivize long-term users to "be positive about the stock," although it could also contribute to increased volatility in the stock's performance.

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