Our next guest predicted Reddit to lead the mainstream wave of IPOs back in January, but he says he wishes some other company was leading the charge. Let’s find out why from Duncan Davidson, partner at Bullpen Capital. Duncan, welcome. Good to have you with us. Why would you prefer to see another somebody other than Reddit? Sort of in the at the point of the spear here? It’s because of all the skepticism of Reddit. I hope it’s a successful offering, but the most ironic part of this is one of the biggest Reddit communities. Wall Street bets has sentiment, which is highly negative of the IPO. They they think it’s going to be a pump and dump situation, not a sustainable situation. I hope they’re wrong. They say short it right. Yes, they’re the sentiments, highly negative. It’s kind of ironic, I think, but if it turns out it captures their attention, then it turns into what’s people call stonk a mean stock and it could run up like crazy. But I do not expect that to happen, nor do I expect to pop. I think it’s going to price high as you said, but I think it’s going to be a little bit of a volatile offering given the range of sentiment on it. Does, does the, does the Estera Labs IPO tell you that hey, this is a good time to go public and and if Reddit has a good debut does that say, hey IPO’s may they may start coming to market at a greater pace? Well, I would like to say that but I’m not sure Estera is trying to ride the AI wave. It’s not really an AI stock, but it’s certainly getting bought by data centers that have a huge demand from AI. Reddit arguing it’s an AI company, but it’s really not because it’s selling its data to in the first case Google maybe later open open AI ChatGPT, but it’s not really the core of what it does. It’s not AI. So you’re seeing the market really is hungry for AI. It’s not quite as clear, it’s that hungry for social. So let’s talk about about social there for a minute here. This is a company that has something like 800 million in annual revenues. I’ve, I think I’m right on that, I’m not sure, but how do they not make money? Well, their argument is they haven’t really tried. They’re now trying very hard. They’re going to be a billion dollars of revenue next year if you believe their plan. A billion 2 after that. This isn’t a This offering on the surface looks amazing. This is a #3 social site with attention in the world after meta or Facebook and Google. It should be doing much better. Professor G, who a lot of people read and I find very entertaining and very insightful, thinks it’s got 100 X upside. Well, I don’t think he’s a good stock picker, but this thing does have upside. If they actually go toward profitability and keep growing, this thing could at least double or triple from where it is at the offering tomorrow. I just don’t think that will happen quickly. There’s a huge overhang in this this company of private investors and some at higher prices. So more likely I would recommend to people watch this thing if it isn’t become a stonk and go up like crazy. I’ve just wait till after the overhang, the six month lock UPS over with none of look at buying it and holding it as a serious long term play. Was it smart of them to offer the stock to their so-called redditors? I think it is. I mean it does create some volatility risk in terms of retail investor going in and going out, but their community is their strength and they need to feed and support the community. The community is actually very skeptical of the advertising model because that doesn’t like ads. But having said all that, I think the community in the end will, Wall Street bets notwithstanding, will support their own company here.
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