Reddit filed to go public last Thursday, and the fine print of its initial public offering (IPO) prospectus indicates that the social media company plans to monetize itself by making its data useful to artificial intelligence (AI) developers. The IPO documentation also revealed that OpenAI founder Sam Altman is a major stakeholder. It is unclear if Altman will sell his shares or hold onto them for leverage.
In its 20 years of operation, Reddit has never once turned a profit–but it appears Reddit is planning to solve this problem by selling its data to AI technology firms. Text from the filing reads: “We believe our growing platform data will be a key element in the training of leading large language models (LLMs) and serve as an additional monetization channel for Reddit.” It listed Google’s Gemini, OpenAI’s ChatGPT, and products from startup Anthropic as prospective LLMs.
According to the S-1 filing, Sam Altman holds an 8.7 percent stake in Reddit, making him the third largest shareholder in the company. He wields 9.2 percent of board voting power and is virtually guaranteed to make millions from the offering.
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On Wednesday, Reddit formally signed off on a deal with tech giant Google to make its content available for AI training.
Reddit’s IPO journey has reportedly been long and winding, due to hesitation around its alleged platforming of “hate speech,” its lack of sufficient oversight, and recent a battle with its user-moderators.
Co-founder and CEO Steve Huffman said Reddit’s business opportunities include “advertising, monetizing commerce on the platform, and licensing data.” In 2023, it had a revenue of $804 million, a 21 percent increase from 2022. Its gross margin increased from 84 percent in 2022 to 86 percent in 2023, and it reduced its yearly net loss from $158.6 million in 2022 to $90.8 million in 2023. The website’s userbase also grew 27 percent, finishing the fourth quarter with 73.1 million daily active users (DAUs).
Reddit stated it will give top users—those with a high amount of “karma,” its internal user-decided scoring system—an option to buy shares in the company. It will be the first major social media company to go public since Snapchat in 2017 and will be the last social media company of its generation to do so.
Reddit is poised to hit the New York Stock Exchange in March with the ticker symbol RDDT.
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Shane Devine is a writer covering politics, economics, and culture for Valuetainment. Follow Shane on X (Twitter).
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