Reddit’s surge on its first day of trading, a day after AI infrastructure group Astera Labs jumped 72 percent in its Nasdaq debut, also signals a validation of public investor demand for listings—even a company that is unprofitable, such as Reddit.

“Overall, this is a very positive development for IPO markets [and] should bode well for many of the pre-IPO companies sitting in the queue,” said Christian Munafo, chief investment officer of Liberty Street Advisors.

But, Munafo said, “while [Reddit] performed well out of the gate, the stock may come under pressure unless they are able to demonstrate better growth and monetization.”

Either way, the deal is a boon for Huffman. The chief executive sold 500,000 of his shares in the IPO, cashing out a plump $17 million, and is due to receive additional equity awards as a result of listing the company above a $5 billion valuation. He also received an estimated $193 million pay package last year, mostly made up of equity awards, according to filings.

Historically, Huffman’s style as a leader has reflected that of Reddit’s unruly user base. The self-confessed “internet troll” initially squirmed at the idea of policing the more extreme communities hosted on the platform, relying on these groups to create their own rules and self-moderate. He has defended and cheered on Reddit’s WallStreetBets trading forum that shot to mainstream fame when members collectively bought so-called meme stocks in a bid to squeeze hedge funds*.

But Huffman has recently been forced to tidy up the darker underbelly of the platform for advertisers, present a more professional front to Wall Street and hunt harder for profitability. As a result, Reddit has shifted its ambitions slightly to pin its fortunes to wider tech trends. When Reddit first filed for an IPO in 2021, AI was mentioned once in its prospectus. In the 2024 version, AI appeared more than 60 times.

Nevertheless, the approach has left Huffman and the company at odds with some Reddit communities, who have been resistant to any changes to the platform. Facing new pressures as it enters public markets, some analysts warn that Reddit’s character could be destroyed and users may seek out alternatives, in a drag to the company.

“Reddit, more so than many social media platforms, has been a very community-based, non-commercial space and people know and love it for [this],” said Samuel Woolley, a propaganda expert and assistant professor at the University of Texas at Austin.

“I think the big question that should be on everyone’s mind for Reddit is to what extent the IPO will change the very nature and fabric of the platform.”

Additional reporting by Nicholas Megaw in New York.