TheChek News Flow

An additional listing would increase the liquidity of the company’s shares, expand its global reach and drive business growth

Luggage maker Samsonite 1910 -8.47%decrease; red down pointing triangle is looking at the U.S. as a potential venue for a second listing, tapping investor appetite in a market that has been hitting new highs, according to people with knowledge of the plan.

The potential fundraising could be less than $500 million, one of the people said, adding that these details are yet to be finalized.

“We are in the early stages of this process and have nothing to add beyond what is in the announcement published this morning,” a Samsonite spokesperson said in an email.

Samsonite said earlier Friday that it was planning another listing on a leading stock exchange besides Hong Kong.

An additional listing would increase the liquidity of the company’s shares, expand its global reach and drive business growth, Samsonite said.

Samsonite, the world’s largest luggage maker, was established in 1910 as a trunk manufacturer in Denver.

The company was listed on the Hong Kong Stock Exchange in 2011 and raised $1.25 billion then. Its market capitalization was over $5.5 billion as of Thursday.

Samsonite’s improved business performance, fueled by a resurgence in travel demand following the pandemic, has led to optimism in considering another venue for a listing.

The company’s sales grew 28% to $3.68 billion in 2023, with net profit rising 33% to $417.0 million.

Expectations that the Federal Reserve would cut rates later this year have lifted investor demand for equities, driving U.S. stock indexes to new highs.

However, investors in Hong Kong were disappointed by Samsonite’s plan to pursue a dual listing. The stock was down 9.0% at 27.95 Hong Kong dollars (US$3.57) at midday on Friday.

“While this move may benefit its liquidity and expand investor base in the mid-to-long-term, we expect the share price to react negatively given potential share dilution,” Citi analyst Lydia Ling said in a note.

Social media site now faces the challenge of adjusting its sometimes unruly business to please public shareholders

In an interview on the New York Stock Exchange trading floor ahead of Reddit’s market debut on Thursday, chief executive Steve Huffman acknowledged that the mischievous retail investors that congregate on the social media platform might deliberately drive down its share price. 

“It’s a free market!” he said.

For Reddit, as for Huffman, the bet on a public offering for a site he described as a “fun and special, but sometimes crazy place” has appeared to pay off. 

Shares of the social media company soared on its Big Board debut under the ticker RDDT, closing at $50.44, or 48 per cent above its IPO price. This brought its fully diluted market capitalisation to $9.5bn, close to where the company was last valued privately at $10bn in 2021.

Reddit’s journey to public markets marks a turning point for a fringe, free speech-oriented platform dominated by esoteric memes, sardonic humour and gamers, as it transforms itself into a more mainstream discussion hub that enforces stricter moderation rules in order to attract advertising dollars. 

The picture for its earlier investors was mixed. One big winner was the Newhouse family, who through Advance Magazine Publishers Inc own Condé Nast, which bought Reddit in 2006 for $10mn before spinning it out in 2011. Its shares are now worth about $2.1bn, a handsome windfall to their publishing empire, which also includes Vanity Fair, the New Yorker and Vogue. Entities affiliated with OpenAI chief executive Sam Altman now hold a stake worth $613mn.

But investors who put money in at the last financing round in 2010 at $61.79 a share, such as Fidelity, were looking at slightly less on that particular investment.

Founded in 2005, the self-proclaimed “front page of the internet” has battled through management upheaval and moderation scandals to grow to 73mn daily users across its 100,000 communities, or “subreddits”, per Reddit parlance. It is a social media minnow, however, relative to Meta or X, which have more than 2.1bn and 245mn daily active users, respectively. 

Still, its IPO attracted institutional interest. Demand was strong, and the top two dozen investors in the deal, who received the majority of its shares, were typically large asset managers who intend on owning the stock for the long term, one person familiar with the matter said.

Reddit’s surge on its first day of trading, a day after AI infrastructure group Astera Labs jumped 72 per cent in its Nasdaq debut, also signals a validation of public investor demand for listings — even a company that is unprofitable, such as Reddit.

“Overall, this is a very positive development for IPO markets [and] should bode well for many of the pre-IPO companies sitting in the queue,” said Christian Munafo, chief investment officer of Liberty Street Advisors. 

But, Munafo said, “while [Reddit] performed well out of the gate, the stock may come under pressure unless they are able to demonstrate better growth and monetisation”.

Either way, the deal is a boon for Huffman. The chief executive sold 500,000 of his shares in the IPO, cashing out a plump $17mn, and is due to receive additional equity awards as a result of listing the company above a $5bn valuation. He also received an estimated $193mn pay package last year, mostly made up of equity awards, according to filings. 

Historically, Huffman’s style as a leader has reflected that of Reddit’s unruly user base. The self-confessed “internet troll” initially squirmed at the idea of policing the more extreme communities hosted on the platform, relying on these groups to create their own rules and self-moderate. He has defended and cheered on Reddit’s WallStreetBets trading forum that shot to mainstream fame when members collectively shorted so-called meme stocks in a bid to squeeze hedge funds.

But Huffman has recently been forced to tidy up the darker underbelly of the platform for advertisers, present a more professional front to Wall Street and hunt harder for profitability. As a result, Reddit has shifted its ambitions slightly to pin its fortunes to wider tech trends. When Reddit first filed for an IPO in 2021, AI was mentioned once in its prospectus. In the 2024 version, AI appeared more than 60 times. 

dit’s IPO is a regrettable mis-step in corporate governance

Nevertheless, the approach has left Huffman and the company at odds with some Reddit communities, who have been resistant to any changes to the platform. Facing new pressures as it enters public markets, some analysts warn that Reddit’s character could be destroyed and users may seek out alternatives, in a drag to the company. 

“Reddit more so than many social media platforms, has been a very community-based, non-commercial space and people know and love it for [this],” said Samuel Woolley, a propaganda expert and assistant professor at the University of Texas at Austin. 

“I think the big question that should be on everyone’s mind for Reddit is to what extent the IPO will change the very nature and fabric of the platform.”