Reddit has filed an S-1 statement 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 this document, Reddit claims that last year it generated $804 million in revenue, the vast majority of which came from advertising (98%). However, the company is unprofitable, with a net loss of $90.8 million in 2023. The service has 267.5 million weekly active users, more than 100 thousand active communities, and 1 billion posts.
Rather unusually, Reddit gives 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 granted to professional investors who want to buy shares at a theoretically lower price before everyone else can buy 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 tier, people with a karma score of at least 2000 and those who «have completed at least 5000 moderator actions» will be offered shares. The company says it has reserved 1.3 million shares of its Class A stock «to fund community-related programs that enable Redditors to bring their ideas to life».
Reddit calls data licensing and training of AI models among the components of its monetization strategy announced an agreement with Google on training artificial intelligence systems, which will bring in $60 million a year.
Interestingly, the CEO of rival company OpenAI, Sam Altman, has invested more than $60 million in Reddit shares and controls 9.2% of Reddit’s votes. Altman first invested in Reddit in 2014, when he was president of the Y Combinator accelerator, and continued to invest in 2021, increasing his stake.