The stocks of social media platform Reddit (RDDT) and semiconductor company Astera Labs (ALAB) each soared in their debuts this past week, showing that the market for initial public offerings (IPOs) in the U.S. is strong.
Reddit’s stock ended its first day of trading in New York up 48%, while Astera Labs stock is trading 77% above its IPO price following two days of trading on the Nasdaq exchange.
Both Reddit and Astera Labs were able to price their IPOs at the top end of their target range and each company was valued at more than $5.50 billion U.S.
Reddit had priced its shares at $34 U.S. each while Aster Labs priced its IPO at $36 U.S. per share.
By some estimates, the Reddit IPO was five times oversubscribed due to strong demand from investors.
The results show that the appetite for IPOs on Wall Street is strong in the U.S. following two difficult years for the new issuance of stock.
The Reddit and Astera Labs IPOs come six months after successful share offerings were made by shoemaker Birkenstock (BIRK) and microchip designer Arm Holdings (ARM) last autumn.
Both Birkenstock and Arm Holdings’ stocks are up more than 25% since holding their IPOs. The share price of Arm has more than doubled.
Both Reddit and Astera Labs also had successful IPOs despite the fact that neither company is profitable and both operate in highly competitive markets.
According to data from EY, the global IPO market ended 2023 with 1,298 initial public offerings that, combined, raised $123.20 billion U.S.
That was down 8% from 2022 levels and down 47% from the record number of IPOs held in 2021 when global markets last peaked.
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