Reddit shares soared as much as 70% on Thursday’s debut in the first initial public offering of a major social media company since Pinterest released on the market in 2019.

The 19-year-old website, which hosts millions of online forums, priced its IPO on Wednesday at $34 a share, the top of an expected range. Reddit and the selling shareholders raised about $750 million from the offering, with the company raising about $519 million.

Shares opened at $47 and hit a high of $57.80. At Thursday’s peak, the company had a market capitalization of about $10.9 billion.

Trading under the ticker symbol ‘RDDT’, Reddit is testing investor appetite for new tech stocks after a prolonged dry spell for IPOs. After the peak of the tech boom in late 2021, there are hardly any venture-backed tech companies that have gone public, and those that have – like Instacart and Clavio last year — are dissatisfied. On Wednesday, a data center hardware company Astera Laboratories made its debut on the Nasdaq public market and saw its shares jump 72%, underscoring investor excitement about the business associated with the artificial intelligence boom.

At the IPO price, Reddit was valued at about $6.5 billion, down from the company’s private market valuation of $10 billion in 2021, which was a boom year for the tech industry. Sentiment changed in 2022 as rising interest rates and rising inflation pushed investors away from high-risk assets. Startups have responded with layoffs, valuation cuts and a shift in focus from profit to growth.

Reddit’s annual sales for 2023 rose 20% to $804 million from $666.7 million a year earlier, the company detailed in its prospectus. The company posted a net loss of $90.8 million last year, down from its $158.6 million loss in 2022.

Based on its revenue over the last four quarters, Reddit’s IPO market cap gave it a price-to-sales ratio of about 8. Alphabet trades for 6.1 times earnings, Meta has a multiple of 9.7, Pinterest is at 7.5 and A click trades for 3.9 times sales, according to FactSet.

In addition to these companies, Reddit also includes X, Discord, Wikipedia and on Amazon Streaming service Twitch as competitors in its prospectus.

Reddit is betting that data licensing could become a major source of revenue and said in its filing that it has entered into “certain data licensing agreements with an aggregate contract value of $203.0 million and terms ranging from two to three years”. This year, Reddit said it plans to recognize roughly $66.4 million in revenue as part of its data licensing deals.

Google also went into advanced partnership with Reddit, allowing the search giant to gain more access to Reddit data to train AI models and improve its products.

Reddit revealed on March 15 that the Federal Trade Commission was conducting a non-public investigation “focused on our sale, licensing, or sharing of user-generated content with third parties to train AI models.” Reddit said it was “not surprised that the Federal Trade Commission has expressed interest” in the company’s practices for licensing AI-related data, and that it did not believe it had “engaged in an unfair or deceptive business practice.”

Reddit was founded in 2005 by tech entrepreneurs Alexis Ohanian and Steve Huffman, the company’s CEO. Existing stakeholders, including Huffman, sold a total of 6.7 million shares in the IPO.

As part of the IPO, Reddit gave some of its top moderators and users, known as Redditors, a chance to buy shares through a directed share program. Companies like Airbnb, Doximites and Rivian have used similar programs to reward their power users and customers.

“I hope they believe in Reddit and support Reddit,” Huffman said in an interview with CNBC on Thursday. “But the goal is just to get them into the deal. Just like any professional investor.”

Redditors expressed skepticism about the IPO, both because of the company’s financials and its often troubled relationship with moderators. Huffman said he recognizes that reality and credited the controversial Wallstreetbets subreddit that helped spark the boom in meme shares as GameStop.

“That’s the good thing about Reddit, they tell it like it is,” Huffman said. “But you have to remember that they’re doing this on Reddit. It’s a platform they love, it’s their home on the internet.”

OpenAI CEO Sam Altman is one of Reddit’s major shareholders along with Tencent and Advance Magazine Publishers, the parent company of publishing giant Condé Nast. Altman’s stake in the company was worth more than $400 million before the stock began trading. Altman led a $50 million funding round at Reddit in 2014 and served on its board from 2015 to 2022.

I’M WATCHING: Investors are watching Reddit IPO ‘very closely’.