Does Reddit’s IPO signal the end of the tech winter?

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Hello reader,

I look back at the 2020 to 2022 period with a bit of nostalgia. For the startup community in Southeast Asia, those were some really exciting years.

Startup funding was reaching new highs, Grab had gone public in a record-setting SPAC deal, other firms like GoTo and PropertyGuru had followed suit, and it felt like Southeast Asia’s tech scene was finally coming of age.

What we didn’t know then was that winter was coming. The latter part of 2022 was when the chill started creeping in, and for the past year or so, we’ve all been knee-deep in the snow.

Fortunately, the spring thaw might be upon us – if the excellent performance of Reddit’s stock market debut is any indicator. However, things are unlikely to go back to the way they were, and a new era of sustainable growth and profitability may be here.

Today we look at:

• What Reddit’s IPO success means for the tech winter
• VC firm Accel’s interest in rural India
• Other newsy highlights such as OpenAI blocking APIs in unsupported regions and Flipkart’s payments app

Premium summary

A tale of two IPOs – and more

Image credit: Timmy Loen

Reddit’s IPO in March made the social media firm the first major company to go public in 2024, and it was probably the most hyped listing in the last 18 months.

It appears to have lived up to the hype. The firm’s stock price popped 50% on its first day and is now nearly double its debut price. The listing is also an indicator of how the markets have changed.

• All the right reasons: The consistently good performance of Reddit’s stock price shows that it has staying power and, crucially, robust investor confidence. In May, the firm reported its first profit since going public, with a 48% year-on-year revenue increase and a 37% uptick in daily active users. It’s move to diversify from digital advertising by licensing out its rich repository of conversational data, a valuable resource for AI development, has also been compelling.
• On the other hand: Contrast this with cybersecurity firm Rubrik, which went public at around the same time. Rubrik’s stock has fallen by nearly 20% since its debut, despite reporting revenue growth of over 40% in its first post-IPO quarterly earnings. This is likely due to the US$700 million loss it made in the quarter – a large and unexpected number that may have spooked investors. It is evident that the public markets no longer reward the prepandemic mentality of growth at all costs.
• Spring has sprung? Optimism is returning to global public equity markets, driven by a growing pipeline, robust market performance, lower volatility, and an improving inflation outlook. However, larger geopolitical tensions and elections worldwide could affect this.

Read more: Reddit’s IPO signals thawing tech winter, but listing game has changed

The rural opportunity

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