Per the usual IPO custom, the remaining shares are expected to be bought primarily by mutual funds and other institutional investors betting Reddit is ready for prime time in finance.

By the tech industry’s standards, Reddit remains extraordinarily small for a company that has been around as long as it has. Thursday’s opening debut valuation of $US9 billion, for example, is still far below the $US1.2 trillion market value boasted by Meta Platforms — whose biggest social media service Facebook was started just 18 months earlier than Reddit.

Reddit has never profited from its broad reach while piling up cumulative losses of $US717 million. That number has swollen from cumulative losses of $US467 million in December 2021 when the company first filed papers to go public before aborting that attempt.

In the recent documents filed for its revived IPO, Reddit attributed the losses to a fairly recent focus on finding new ways to boost revenue.

Not long after it was born, Reddit was sold to magazine publisher Conde Nast for $US10 million in deal that meant the company didn’t need to run as a standalone business. Even after Conde Nast parent Advance Magazine Publishers spun off Reddit in 2011, the company said in its IPO filing that it didn’t begin to focus on generating revenue until 2018.

Those efforts, mostly centred around selling ads, have helped the social platform increase its annual revenue from $US229 million in 2020 to $US804 million last year. But the San Francisco-based company also posted combined losses of $US436 million from 2020 through 2023.

Reddit outlined a strategy in its filing calling for even more ad sales on a service that it believes companies will be a powerful marketing magnet because so many people search for product recommendations there.

The company also is hoping to bring in more money by licensing access to its content in deals similar to the $US60 million that Google recently struck to help train its artificial intelligence models. That ambition, though, faced an almost immediate challenge when the US Federal Trade Commission opened an inquiry into the arrangement.

Since Thursday just marks Reddit’s first day on the public market, Aggarwal stressed that the first key measure of success will boil down to the company’s next earnings call.

“As a public company now they have to report a lot more ... in the next earnings release,” she said. “I’m sure the market will watch that carefully.”

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Reddit also experienced tumultuous bouts of instability in leadership that may scare off prospective investors. Company co-founders Steve Huffman and Alexis Ohanian — also the husband of tennis superstar Serena Williams — both left Reddit in 2009 while Conde Nast was still in control, only to return years later.

Huffman, 40, is now CEO. Although his founder’s letter leading up to this IPO didn’t mention it, Huffman touched upon the company’s past turmoil in another missive included in a December 2021 filing attempt that was subsequently cancelled.

“We lived these challenges publicly and have the scars, learnings, and policy updates to prove it,” Huffman then wrote. “Our history influences our future. There will undoubtedly be more challenges to come.”