Reddit shares close 30% up following social media company’s IPO

Published

2 months ago

March 25, 2024

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Reddit CEO Steve Huffman hugs mascot Snoo as Reddit begins trading on the New York Stock Exchange (NYSE) in New York on March 21, 2024.

Timothy A. Clary | AFP | Getty Images

Reddit shares were up 30% to $59.80 at the market’s close on Monday.

The social media company’s stock has been rising ever since it went public last week and raised roughly $750 million from the IPO, of which the company logged about $519 million.

Reddit shares soared 48% when it began trading on the New York Stock Exchange under the stock ticker “RDDT,” resulting in a number of moderators and users, known as Redditors, earning millions of dollars as a group. Those Redditers, along with corporate insiders and their friends and family members, were able to partake in Reddit’s IPO via a directed-share program, akin to similar offerings by tech companies like Airbnb, Rivian and Doximity.

OpenAI CEO Sam Altman, who was a Reddit investor and a former board member, saw his stake in the company grow from $200 million to over $613 million via the IPO.

Reddit’s IPO came the same week that Astera Labs shares skyrocketed 72% on the day that the data center hardware company made its public market debut on the Nasdaq. Reddit was the first major social media company to have gone public since Pinterest’s IPO in 2019, and investors were monitoring its stock debut to gauge whether the IPO market might pick up after a long lull due to factors like high inflation, poor market responses to several 2023 IPOs and concerns over the wider global economy.

Plexo Capital founding managing partner and Reddit shareholder Lo Toney told CNBC that Reddit’s IPO was “a positive sign not only for Reddit, but I think also the tech industry and what it might mean for future IPOs.”

“One thing we know with certainty is that there are a lot of investor appetite during the roadshow for Reddit and we see that it’s continuing to hold up well,” Toney said. “Clearly the market is signaling there’s an appetite for more companies to come to the public markets.”

Still, Toney said that there are other “dynamics that need to happen,” including a few more companies entering the public market before it’s safe to say that the IPO floodgates have opened. Toney noted that some startups have raised a lot of money so they may not be in any hurry to go public and raise more cash.

“At the same time there are instances where the last private market financing may be higher than what the public market will accept as a public company valuation,” Toney said, adding that some startups with high private valuations may still have concerns about going public at a lower valuation.

Reddit had a private market valuation of $10 billion in 2021 when it last raised a funding round, according to deal-tracking service Pitchbook, and was valued at roughly $6.5 billion based on its IPO price of $34 per share.

Watch: IPO window opening remains to be seen despite strong Reddit IPO.

Reddit surges in 3rd day of trade: Here's what it means for the tech IPO market

Technology

Baidu’s robotaxi unit expects to turn profitable next year

Published

8 hours ago

May 15, 2024

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Baidu’s robotaxi unit expects to turn profitable next year

A driverless robotaxi autonomous vehicle developed by Baidu Apollo driving along a street in Beijing.

Jade Gao | Afp | Getty Images

SHANGHAI — Chinese tech company Baidu said Wednesday its Apollo Go robotaxi arm expects to turn profitable next year.

The projection comes as Elon Musk has emphasized his plans to build up Tesla’s robotaxi efforts amid a decline in revenue.

Baidu is one of the major players in China’s nascent robotaxi market and received permission from a Beijing city district to begin charging fares in November 2021.

While most of the cars still have a human staff worker inside for safety, the same Beijing district officially let Baidu and start-up Pony.ai charge fares for robotaxi rides with no staff in the vehicle in September 2023.

Apollo Go operated about 839,000 rides in the last three months of 2023, according to Baidu’s latest earnings report. The company is due to release quarterly results Thursday.

About 45% of the orders in the fourth quarter in Wuhan were fully driverless, up from 40% the prior quarter, the company said.

In addition to growing usage and reducing labor costs per ride, Baidu is making the cars cheaper.

Baidu on Wednesday announced Apollo’s 6th generation robotaxi will cost around 200,000 yuan ($28,169) — or less than half that of the prior generation, the company said.

This year, Baidu plans to deploy 1,000 of those 6th generation robotaxis in the city of Wuhan, where the company already operates a number of vehicles without any human staff inside.

“With decreasing costs and increasing orders, Apollo Go’s unit economics (UE) is nearing break-even, expected to achieve balance in the fourth quarter of 2024 and turn profitable by 2025,” Baidu said in a press release.

Rival robotaxi operator Pony.ai is preparing for a listing outside mainland China, according to the China Securities Regulatory Commission website in late April.

Others in the auto industry remain more skeptical about fully driverless cars, which require broad regulatory approval in order to operate.

Xpeng Vice Chairman Brian Gu told reporters last month he didn’t expect robotaxis to be a real business for at least five years.

Technology

OpenAI co-founder Ilya Sutskever says he will leave the startup

Published

13 hours ago

May 14, 2024

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OpenAI co-founder Ilya Sutskever says he will leave the startup

OpenAI co-founder Ilya Sutskever said Tuesday that he’s leaving the Microsoft-backed startup.

“I am excited for what comes next — a project that is very personally meaningful to me about which I will share details in due time,” Sutskever wrote in an X post on Tuesday.

The departure comes months after OpenAI went through a leadership crisis in November involving co-founder and CEO Sam Altman.

In November, OpenAI’s board said in a statement that Altman had not been “consistently candid in his communications with the board.” The issue quickly caqme to look more complex. The Wall Street Journal and other media outlets reported that Sutskever came to focus on ensuring that artificial intelligence would not harm humans, while others, including Altman, were eager to push ahead with delivering new technology.

Almost all of OpenAI’s employees signed an open letter saying they would leave in response to the board’s action. Days later, Altman was back at the company, and board members Helen Toner, Tasha McCauley and Sutskever, who had voted to oust Altman, were out. Adam D’Angelo, who had also voted to push out Altman, stayed on the board.

When Altman was asked about Sutskever’s status on a Zoom call with reporters at the time, he said there were no updates to share. “I love Ilya… I hope we work together for the rest of our careers, my career, whatever,” Altman said. “Nothing to announce today.”

On Tuesday, Altman shared his thoughts as Sutskever leaves.

“This is very sad to me; Ilya is easily one of the greatest minds of our generation, a guiding light of our field, and a dear friend,” Altman wrote on X. “His brilliance and vision are well known; his warmth and compassion are less well known but no less important.” Altman said research director Jakub Pachocki, who has been at OpenAI since 2017, will replace Sutskever as chief scientist.

OpenAI has announced new board members, including former Salesforce co-CEO Bret Taylor and former Treasury Secretary Larry Summers. Microsoft obtained a nonvoting board observer position.

In March, OpenAI announced its new board and the wrap-up of an internal investigation by U.S. law firm WilmerHale into the events leading up to Altman’s ouster. Altman rejoined OpenAI’s board, and three new board members were announced: Dr. Sue Desmond-Hellmann, former CEO of the Bill and Melinda Gates Foundation; Nicole Seligman, former EVP and Global General Counsel of Sony and President of Sony Entertainment; and Fidji Simo, CEO and Chair of Instacart.

The three new members will “work closely with current board members Adam D’Angelo, Larry Summers and Bret Taylor as well as Greg, Sam, and OpenAI’s senior management,” according to a company release in March.

News of Sutskever’s departure comes a day after OpenAI launched a new AI model and desktop version of ChatGPT, along with an updated user interface, the company’s latest effort to expand use of its popular chatbot.

The update brings the GPT-4 model to everyone, including OpenAI’s free users, technology chief Mira Murati said Monday in a livestreamed event. She added that the new model, GPT-4o, is “much faster,” with improved capabilities in text, video and audio. OpenAI said it eventually plans to allow users to video chat with ChatGPT. “This is the first time that we are really making a huge step forward when it comes to the ease of use,” Murati said.

In 2015, Altman and Tesla CEO Elon Musk, another OpenAI co-founder, wanted Sutskever, then a research scientist at Google, to become the budding startup’s top scientist, according to the lawsuit Musk filed against OpenAI in March.

“Dr. Sutskever went back and forth on whether to leave Google and join the project, but it was ultimately a call from Mr. Musk on the day OpenAI, Inc. was publicly announced that convinced Dr. Sutskever to commit to joining the project as OpenAI, Inc.’s Chief Scientist,” the legal filing said.

Technology

Google CEO Pichai says company will ‘sort it out’ if OpenAI misused YouTube for AI training

Published

13 hours ago

May 14, 2024

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Google CEO Pichai says company will 'sort it out' if OpenAI misused YouTube for AI training

Alphabet CEO Sundar Pichai speaks at the Asia-Pacific Economic Cooperation CEO Summit in San Francisco on Nov. 16, 2023.

David Paul Morris | Bloomberg | Getty Images

Alphabet CEO Sundar Pichai said Google will “sort it out” if it determines Microsoft-backed OpenAI relied on YouTube content to train an artificial intelligence model that can generate videos.

The comments, in an interview Tuesday with CNBC’s Deirdre Bosa, come after OpenAI technology chief Mira Murati told the Wall Street Journal in March that she wasn’t sure if YouTube videos were part of the training data for the company’s Sora model introduced earlier in the year.

Murati said OpenAI had drawn on publicly available data and on licensed data. The New York Times later reported that OpenAI had transcribed over a million hours of YouTube videos.

Asked if Google would sue OpenAI if the startup violated the search company’s terms of service, Pichai didn’t offer specifics.

“Look, I think it’s a question for them to answer,” Pichai said. “I don’t have anything to add. We do have clear terms of service. And so, you know, I think normally in these things we engage with companies and make sure they understand our terms of service. And we’ll sort it out.”

Pichai said Google has processes in place to figure out if OpenAI failed to comply with the rules. Newspapers such as The New York Times have already taken aim at OpenAI for allegedly breaking copyright law and training models on their articles.

Pichai’s interview followed a keynote to developers at Google’s I/O conference, where executives announced new AI models, including one called Veo that can compose synthetic videos. Those looking to get early access will have to receive approval from Google.

OpenAI preempted the Google event on Monday. The company revealed an AI model called GPT-4o and showed how users of its ChatGPT mobile app would be able to hold realistic voice conversations, interrupting the AI assistant and having it analyze what appears in front of a smartphone camera. On Tuesday, Google showed off similar upcoming capabilities.

“I don’t think they’ve shipped their demo to their users yet,” Pichai said of OpenAI. “I don’t think it’s available in the product.”

OpenAI said in a blog post on Monday that customers of its ChatGPT Plus subscriptions will be able to try an early version of the new voice mode in the weeks ahead. Pichai said Google’s Project Astra multimedia chat capabilities will come to its Gemini chatbot later this year.

“We have a clear sense of how to approach it, and we’ll get it right,” Pichai said.

Google has reduced the cost of serving up AI models in web searches by 80% since showing off a preview last year, relying on its custom Tensor Processing Units (TPUs) and Nvidia’s popular graphics processing units, he said. Google said during the keynote that it’s starting to display its AI Overviews in search results for all users in the U.S.

In June, Apple will hold its Worldwide Developers Conference in Cupertino, California. Bloomberg reported in March that Apple was discussing the idea of adding Gemini to the iPhone. Pichai told Bosa that Google has enjoyed “a great partnership with Apple over the years.” A Google expert witness said in court last November that the company gives Apple 36% of its search advertising revenue from the Safari browser.

“We have focused on delivering great experiences for the Apple ecosystem,” Pichai said. “It is something we take very seriously and I’m confident — we have many ways to make sure our products are accessible. We see that today, AI Overviews have been a popular feature on iOS when we have tested, and so we’ll continue — including Gemini. We’ll continue working to bring that there.”

WATCH: Alphabet CEO on report OpenAI trained GPT-4 on YouTube: We have clear terms of service