Reddit, the American news and social platform, announced this week that it will go public on the New York Stock Exchange on Thursday (3/21) under the ticker symbol RDDT, with an initial public offering (IPO) price of $34 per share. The IPO is expected to issue 22 million shares, raising approximately $748 million in external funding and valuing the company at $6.4 billion. This marks the first major social platform to go public since Pinterest’s IPO in 2019.
Founded in 2005, Reddit allows registered members to upload various content such as articles, links, photos, and videos. Other members can then vote on the content, either upvoting or downvoting, to determine its ranking. Reddit currently has over 100,000 communities, with a daily unique visitor count of 73 million and a weekly count of 267 million, accumulating over 1 billion posts. Its valuation reached as high as $10 billion in 2021.
Reddit’s primary revenue stream has historically come from advertising, including sponsored posts and promoted content. The company reported annual revenues of $666 million in 2022 and $804 million in 2023, with net losses of $158 million and $90 million, respectively. Sam Altman, co-founder of OpenAI, and affiliated entities hold more than 5% of Reddit’s shares.
Despite being the ninth-largest website in the United States and having a large user base, as well as being an influential social platform, there are still doubts about Reddit’s ability to succeed, given its lack of profitability since its inception.
However, the emergence of large language models (LLMs) may change the landscape. Reddit can generate revenue by licensing its platform content to AI companies for LLM training. In addition to expanding its partnership with Google, Reddit revealed in its IPO filing that it is in the early stages of allowing third-party access, search, and analysis of platform data for monetization purposes. In January of this year, Reddit signed a contract worth $203 million, expected to be realized within the next 2-3 years, with at least $66.4 million earmarked as revenue for this year.