Reddit filed an S-1 filing with the Securities and Exchange Commission (SEC) detailing its finances and business goals ahead of its initial public offering (IPO) on the New York Stock Exchange under the symbol RDDT.
In the document, Reddit claims it generated $804 million in revenue last year, the vast majority of which came from advertising (98%). However, the company is unprofitable, its net loss in 2023 amounted to $90.8 million. The service has 267.5 million weekly active users, more than 100 thousand active communities and 1 billion publications.
Quite unusually, Reddit is giving an unspecified number of its top users, including moderators and those with high karma scores, the opportunity to buy shares in the IPO. This is a privilege usually given to professional investors who want to purchase shares at a theoretically lower price before everyone else can purchase them on the public market.
Reddit will distribute shares through a tiered system, starting with “certain users and moderators identified by us who have made significant contributions to Reddit's community programs.” After this first level, people with a karma score of at least 2000 and those who have “performed at least 5000 moderator actions” will be offered to purchase shares. The company says it has reserved 1.3 million of its Class A shares “to fund community-related programs that allow redditors to bring their ideas to life.”
Reddit calls data licensing and training AI models one of the components of its monetization strategy. The company previously announced a deal with Google to train artificial intelligence systems, which will bring in $60 million a year.
Interestingly, rival OpenAI CEO Sam Altman has invested more than $60 million in Reddit stock and controls 9.2% of Reddit voting power. Altman first invested in Reddit in 2014 while he was president of accelerator Y Combinator, and has continued to invest in 2021, increasing his stake in the stock.
Source: The Verge, CNBC
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