Reddit's (RDDT) stock climbs higher Monday morning, the social media company's third day listed on the New York Stock Exchange. Yahoo Finance Head of News Myles Udland joins the Live show to highlight the narratives swirling around Reddit's IPO last week, including what it signifies for the IPO market and whether the platform could turn out to be the latest AI play.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

[AUDIO LOGO]

SEANA SMITH: Shares of Reddit pushing even higher today, up another 10% in early actions. The third day of trading here for the company. The recent gains pushing Reddit's market valuation right around 8 billion.

So the question that many investors are asking out there is whether or not Reddit's debut opened up the so-called IPO window for other companies that are looking to go public. Here with more, who better to ask, Yahoo Finance's head of news, Myles Udland.

Myles, what do you think? Because there was so much put into-- so much hype surrounding Reddit's IPO, clearly outperformed. Does that though really signal some of the activity that we could see?

MYLES UDLAND: Yes.

SEANA SMITH: Why?

MYLES UDLAND: I think that's it. I mean, I think if you look at the way the market is receiving Reddit's IPO, the market is saying we would like more new issues.

Now, if you look at Josh's story from last week about why it won't lead to a boom, I think there's some interesting mechanics in there about how much money a lot of companies raised over the last couple of years that makes their need for more capital go away.

I mean, and I'll just say, I know well some of these companies that raised multiple years. Like five, seven years of runway, especially given all the layoffs you have to cover to do right now.

So you don't need to go public to get any of the capital raise. I mean, Stripe last year-- maybe end of 2022, they raised money just to pay out early investors and to pay out employees. So they were able to get funding in the private markets to obviate their need to go public.

But Reddit right now, the way the market is receiving Reddit is it's saying if this is even on your roadmap, if you are thinking about doing it, you no longer have the excuse to say something like, well, market conditions make it too hard for us.

I think if you're a management team that has been getting any pressure from your investors or your board to consider an IPO and you've been putting it off because you think the market won't be receptive to it, I think that story is over now.

- Well, clearly, you know, the company is very well, Myles. I'm curious-- do you think that the factors that are driving the success around Reddit's IPO specific to Reddit and the fundamentals of that company, what factors are broader market factors that would indicate that other companies will succeed as well?

MYLES UDLAND: Well, I think if there's a factor that's specific to Reddit, it's probably our old friend AI. And Reddit basically saying, well, not basically saying. Reddit getting a bunch of money from Google right now to license its whole-- basically its back catalog, I guess you could say, of text that's on the internet.

Interesting to think that like Reddit slang will now be feeding into our AI algorithms. But we can leave that one for another time. I think that-- that's probably like the Reddit specific part of it.

But to me, ultimately, in a market where you have so few IPOs and there are so few names that have come public in the last six months that have this kind of consumer awareness. This is a majority macro play.

I mean, I think it's, again, like there's all kinds of dynamics in here around the stock specifically. But every banker who is a part of that roadshow, given where it's priced, given how it's acted, everyone is on calls today.

And everyone's in meetings being like, let's go. Like literally pounding the table as I just did. Because this is the time to go and do it. The Fed has told you rates are not going higher. We have some visibility into what's going to happen there. So the cost of capital, have a pretty good visibility into what that's going to be and this is the time to go do it.

So they no longer have an excuse. But then my follow-up question is how important is that AI component of this? Just in terms of resonating with investors out there?

I think that you cannot go public today without an AI play. Like you have to have something in there that has AI. I mean, you probably can't be private today and stay private and not be like what's your AI strategy?

I don't think there's a single meeting in the tech space that comes and goes these days without someone saying what's the AI play? Does it have an AI strategy. This, that, the other.

Now what does that mean? I don't really know. But I think you have to have that as a component of your pitch. Even better if you could have a chips play in here too. Like we're derivative around NVIDIA or whatever it is.

I mean, you look at the names on the screen like I don't think there's any question there's a very robust-- I mean, obviously two of them are literally AI plays. But like Stripe and Shein are not going to have any problem getting the AI story into their prospectus and like what they're selling to investors.

But you don't have to be nearly this kind of like clear with what business line you're in to have some sort of AI play around that, as you get into it this year.

I think the lesson also for a lot of these companies from 21 as that market cools down is like, you know, I wouldn't miss the window.

- Yeah.

MYLES UDLAND: Like you might have-- it might be-- I mean, a lot of the overhang-- like look at the volume there in 2021. Obviously, there's going to be a hangover. But the market was--

I mean we did Uber, Peloton, Lyft, we did all these names before the pandemic. Those were 2019 companies. 2019 vintages, let's say. So I think that the market right now is saying '24, '25, need to look a lot more like '18, '19.

SEANA SMITH: Yeah.

Than maybe had been planned previously.

- Myles, thank you so much. As always, you can find more of Myles coverage on the Yahoo Finance platform of course.