Reddit's (RDDT) IPO marks the first major company to go public in 2024. But experts don't think it will bring a grand reopening of the IPO market, which has cooled off since 2021.

"I don't think there's going to be a boom," said University of Florida Warrington College of Business professor Jay Ritter, who studies IPOs.

Ritter reasons the current IPO market is in a lull similar to those seen following previous booms such as the dot-com bubble. Part of the holding pattern in IPOs that developed during the last several years was a surge in valuations for private companies.

This has led to several companies who have recently gone public seeing their valuation fall after listing on a major exchange, a deterring factor for company executives and institutional investors who own significant shares in the business and therefore would benefit from a higher valuation.

For instance, Reddit's IPO was priced at a valuation near $6.5 billion, down from its $10 billion private valuation in 2021. Valuation drops from prior funding rounds also occurred for Instacart (CART) and Arm Holdings (ARM).

"Especially for venture-backed companies, a lot of them didn't want to do essentially down rounds," Ritter said. "And I think that's been one of the things holding back some of these companies [that aren't going public]."

Some, however, argue the key takeaway from 2021's IPO boom wasn't the valuations. It was all about Special Acquisition Companies, also known as simply "SPACs." When removing SPACs, the skyrocket of IPOs in 2021 looks less outsized compared to historical averages, Matt Fry, chair of the capital markets and securities practice group at law firm Haynes and Boone, pointed out.

Fry noted SPACs have since "largely fizzled out," and believes more companies will seek a traditional IPO moving forward as a way to raise capital for their business.

'A wait-and-see approach'

As the first major IPO of 2024, Reddit is expected to serve as a test of investor appetite in newly public companies, particularly ones that are serving up an artificial intelligence pitch.

While the company currently makes nearly all of its revenue from advertising, the social media giant pointed out in its S-1 filing it sees licensing data for AI use as a potential market opportunity.

"Our content is particularly important for artificial intelligence (“AI”) — it is a foundational part of how many of the leading large language models (“LLMs”) have been trained," the company wrote in the filing. "Our massive corpus of conversational data and knowledge is what makes us unique, and we believe its value will continue to grow over time as our user-generated data continues to grow."

This, Ritter said, is expected to be a theme in IPOs this year given the current market focus on companies that could benefit from AI.

Given the potential AI use cases at play and Reddit's recognizable consumer-facing brand, those in the IPO space will be watching to see how the market reacts to Reddit's listing.

"Reddit is a big enough name, a household name, that it could open the market for other companies," said Fry, whose law firm works with companies going public. "We're definitely seeing a lot of inbound interest on IPOs. But it really is a wait-and-see approach from companies."

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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