Reddit and Astera Labs have seen significant gains in their stock prices since going public, bringing some positive signals to the recent IPO market.
On Monday, social media company Reddit's stock price surged by another 30%, reaching $59.8. The company went public last Thursday on the NYSE at an offering price of $34, opening 38.2% higher on the first day and accumulating a 75.9% increase by Monday.
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At the same time, semiconductor startup Astera Labs, which went public alongside Reddit, also showed impressive performance. On Monday, Astera Labs' stock price rose by 21.43% to $85. Astera Labs debuted on the Nasdaq last Wednesday at an offering price of $36, opening 72% higher on the first day and accumulating a 136.1% increase by Monday.
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Furthermore, Astera Labs and Reddit are among the largest IPOs since 2024, with Astera Labs raising $712 million and Reddit raising $750 million through their IPOs.
However, there are some subtle differences between the two. Reddit's success has been somewhat unexpected by the market, as companies with a negative EBITDA and typically only 20% annual growth rate rarely achieve such results; Astera Labs' success, on the other hand, was somewhat anticipated due to the strong endorsement from NVIDIA CEO Jensen Huang during the roadshow. Even with its offering price above the target range, it did not hinder its stock price from soaring.
The buzz around Reddit and Astera Labs is seen as a sign of the IPO market's recovery, with the IPO-focused ETF product Renaissance IPO ETF rising by 2.9% last week, outperforming the S&amp;P 500 index.
The IPO market in 2022 and 2023 was lackluster due to concerns about rising interest rates and inflation. According to S&amp;P Global Market Intelligence data, the fourth quarter of last year was the quietest quarter for the global IPO market since 2012.
Scott Galloway, a professor at New York University and host of the podcast Pivot, described Astera Labs as &#34;lighting up the runway&#34; and Reddit as &#34;bringing the plane to land&#34; in the latest episode, illustrating the trend of the IPO market heating up.
Plexo Capital founding partner and Reddit shareholder Lo Toney stated in a media interview that Reddit's IPO is &#34;not only a positive signal for Reddit, but I believe it is also the same for the tech industry and future IPOs.&#34;
&#34;One thing we are certain of is that during Reddit's roadshow, there was a very strong demand from investors, and we see that this demand is still ongoing,&#34; Toney said. &#34;The market is clearly signaling that investors want more companies to enter the public market.&#34;
However, Toney also mentioned that more companies need to join the public market before it can be confirmed that the IPO market is fully open. He pointed out that some startups have already raised a significant amount of funding, so they may not be in a rush to raise more funds through public listings.
Data shows that the number of companies listed so far in 2024 has increased by over 20% compared to last year. Experts interviewed by Quartz magazine expect more companies to file for IPOs following Reddit's listing. Upcoming candidates for listing include Lineage Logistics, with a valuation target exceeding $30 billion, and Rubrik, with a latest valuation of $4 billion.
In addition to the positive signals from Reddit and Astera Labs, the strong performance of the S&amp;P 500 index this year and the optimistic economic outlook brought by the dovish stance of the Federal Reserve have also boosted confidence in potential IPOs

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The listing of Reddit is not only a positive signal for Reddit itself, but also for the technology industry and the IPO market

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Reddit and Astera Labs, two major technology IPOs, continue to soar. Is a new wave of speculation in the US stock market coming?