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Reddit’s Bet on Redditors
Reddit is the latest company ready to test the uncertain IPO market, with the nonprofit social media company filing to go public around a passionate community of newshounds, cryptocurrency devotees, and reality TV fans.
The company is seeking a valuation of at least $5 billion and DealBook examined its prospectus to find out its pitch to investors.
Its army of users, big-name backers, and its bet on artificial intelligence feature prominently, The company believes that AI is helping to boost its ad-sales business and generate new licensing revenue. Reddit confirmed yesterday that it has signed a deal with Google, reportedly worth $60 million per year, to help the search giant train its AI models.
Given the surge in demand for AI that is fueling the global stock market rally, this will likely appeal to investors. But whether this is enough to make Reddit profitable is a big question upon listing.
Reddit power users will be allowed to buy at a price typically reserved for institutions. such an arrangement is unusual Uber and stock-trading app Robinhood did something similar — and riskier (especially if, like Robinhood, the stock subsequently sinks.)
Investors should keep this in mind, Joachim Clement, investment strategist at Liberum, told DealBook. “My view on this IPO is that Reddit is struggling to make profits and will face the challenge of getting a good valuation,” he said.
WallStreetBets listed as a risk factor, The vibrant Reddit community of day traders and market watchers rose to fame during the meme stock craze in 2021, which helped send shares of retailer GameStop on a wild ride. The stock’s eventual collapse led to congressional hearings on the role of social media in fueling rallies, crashes, and a potential bubble.
The Reddit community quickly realized the irony that its members were being treated like at-risk And A key to cataloguing. “Meanwhile they are inviting WSB users to participate in its IPO,” one user said.
Here are other details from its prospectus:
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Its largest shareholders include Advance Magazine Publishers, Tencent Cloud Europe, Fidelity Management, and OpenAI’s Sam Altman, who was previously a Reddit board member. If Reddit hits its $5 billion valuation target, its stake would be worth $435 million.
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The major underwriters are Morgan Stanley, Goldman Sachs, JP Morgan and Bank of America.
What’s going on over here
Nvidia share price rise set a record. The chip maker added $277 billion to its market value yesterday, the biggest one-day gain ever for a US-listed company, following its stellar earnings report. The results helped boost both the S&P 500 and the Nasdaq Composite and put Nvidia CEO Jensen Huang on the cusp of becoming one of the world’s 20 richest people, according to Bloomberg.
A space start-up’s lander heads to the Moon. The Odysseus robotic spacecraft became the first American spacecraft to visit the Moon since 1972 and the first commercially manufactured spacecraft to reach there. Shares of Intuitive Machines, which went public last year through a blank-check fund, were up 44 percent in premarket trading.
The new investigation examined the safety of Meta and children. The Wall Street Journal reports that executives at the social media giant revealed how Facebook and Instagram’s subscription tools are being misused by adults to exploit their children. And The Times investigated how thousands of accounts run by parents involving girls were run as influencer businesses, followed by large numbers of adult men, many of whom were sexually aggressive towards children. Admit to being attracted to.
Do telecom companies need more regulation?
AT&T’s wireless network was down for hours, leaving thousands of customers without service and knocking out 911 and other emergency services. (Verizon and T-Mobile customers also reported problems, though this may have been caused by them constantly redialing AT&T users.)
The chaos underscores how, with only three major wireless providers, the US is dependent on a small number of companies for a vital utility. While providers are regulated by the FCC, should they face closer scrutiny? That question is already being whispered among Washington policymakers.
Telecom companies will push back strongly, Arguing that this was a one-time incident and that they have been financially incentivized to avoid a shutdown. The industry is also quite popular in Washington: it successfully defeated a bid by the FCC to require eight hours of backup power for cell sites after power outages caused by Hurricane Katrina in 2008.
But the damage caused by such outages can be huge. A big lesson from the pandemic is that we are more dependent than ever on the private businesses that power our economy. (At least one restaurant had to turn away breakfast customers because it couldn’t process payments, The Times reports.)
It also poses a threat to national security, with some observers worried whether a cyberattack is to blame this time. AT&T told ABC News that a software update, not hackers, was responsible.
The Saudis are back in Miami
Some of the country’s most powerful bankers and executives have descended on Miami Beach this week to meet with Saudi Arabia’s investment chiefs, who are hoping to tap billions of dollars of the kingdom’s wealth.
The packed crowd at the Future Investment Initiative is further sign that tense politics between Riyadh and Washington are hardly dampening the appetite to talk deals. (One attendee called it “crack” for American financiers.) Here’s what DealBook’s Lauren Hirsch picked up at the scene:
Saudi spending is changing. Host and head of the Saudi Public Investment Fund Yasser al-Rumayyan said the sovereign wealth fund planned to reduce its international investment exposure from 30 percent to 20 to 25 percent. (The focus instead is on big domestic projects, including the 2034 World Cup.) But the amount of money it plans to spend will increase To $70 billion annually next year, up from about $50 billion today.
A large investor told DealBook that, given the fund’s growing domestic focus, it planned to do more deals in the state.
A-list guests from the world of money and politics meet in the courtyard of a hotel, Donald Trump’s son-in-law Jared Kushner held court at a corner table, while Trump’s Treasury Secretary Steven Mnuchin sat at a table with Franklin Templeton CEO Jenny Johnson. Also there were Michael Dell, former SoftBank executive Marcelo Claure, private equity mogul Robert Smith and Gwyneth Paltrow (who is raising a venture fund).
Artificial intelligence was a major topic on and off stage, One executive told DealBook that people were not fully appreciating how much layoffs technology would bring. Another conversation was mentioned in which other corporate leaders talked enthusiastically about AI-driven cost reductions.
Talk about geopolitics made it to the stage, In contrast to the Riyadh conference in October, which one attendee called “Disney Land” in spirit.
Mike Pompeo, Secretary of State under Trump, raised concerns about Iran and promoted the Abraham Accords, agreements normalizing Israel’s relations with several Arab countries that Pompeo had helped broker.
What to look for in Buffett’s big letter?
Tomorrow is a big day for Berkshire Hathaway: The group will publish both its annual report and Warren Buffett’s latest letter to investors. As they have done for decades, followers of the Oracle of Omaha will ponder what he has to say about the economy, investing and more.
But yesterday’s letter takes on special significance, largely because it is the first since the death of Buffett’s longtime business partner Charlie Munger late last year. Here’s what to see.
What would Buffett say about Munger? Long known as Buffett’s alter ego, Munger was happy to be seen as the sarcastic but intelligent second player at Berkshire Hathaway.
Many expect a tribute from Buffett. “For a guy who’s not typically very emotional, it’s very hard,” Bill Smeed, chairman of Smeed Capital Management and a Berkshire investor for decades, told DealBook. Smeed added, “Munger was his business rock.”
What are Berkshire’s plans for its “elephant gun” cash reserves? Buffett made much of the company’s wealth on large acquisitions, using the vast amounts of money generated from its insurance operations.
The cash pile swelled to more than $157 billion in the third quarter, as Buffett favors buying back Berkshire stock rather than making big deals. (Berkshire’s last big acquisition was the litigation-plagued purchase of Pilot Travel Centers.) Buffett may write that he plans to dust off that gun now — but it’s quite likely he’ll be in favor of keeping it safe.
How will Berkshire prepare itself for the future? Mungar’s death is another reminder that Buffett himself is 93 years old. He has drawn up his succession plans, which include identifying Greg Abel as the company’s next CEO and Todd Combs and Ted Weschler as its chief stock pickers.
But some Berkshire investors want to know more. Smeed said he would like more information about how Combs and Weschler have performed — what Buffett is doing to “prepare us to believe.” Them,
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The judge overseeing FTX’s bankruptcy case will let the fallen crypto exchange sell its shares in privately held AI start-up Anthropic. (Reuters)
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Capital One or Discover reportedly won’t owe any breakup fees if regulators block their $35.3 billion transaction. (CNBC)
Policy
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The International Brotherhood of Teamsters gave $45,000 to the Republican Party, the union’s first major donation to the GOP in years. (Vapo)
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The McKinsey-led think tank is said to have made recommendations to Beijing that were adopted into the “Made in China 2025” policy, increasing tensions with Washington. (FT)
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