In a groundbreaking move, social media giant Reddit is charting a new course towards its initial public offering (IPO) on the New York Stock Exchange, as it invites active users, including moderators and those with high karma scores, to partake in its stock offering. The company, symbolized as RDDT, has filed an S-1 statement with the Securities and Exchange Commission (SEC), revealing key financial details and outlining its business goals.
Financial Snapshot: Revenue, Losses, and User Metrics
According to the S-1 document, Reddit reported a substantial $804 million in revenue for the previous year, with a staggering 98% generated from advertising. Despite this, the platform faces financial challenges, revealing a net loss of $90.8 million in 2023. Impressively, Reddit boasts 267.5 million weekly active users, hosts over 100,000 active communities, and witnesses the publication of a remarkable 1 billion posts.
Exclusive User Offering: A Departure from Tradition
What sets Reddit’s IPO strategy apart is its decision to offer shares not only to traditional investors but also to a select group of its most active users. This distinctive move grants moderators and high-karma individuals the unique opportunity to purchase shares before they hit the public market, a privilege typically reserved for institutional investors.
Reddit plans to distribute shares through a tiered system, beginning with users and moderators who have significantly contributed to the platform’s community programs. Following this initial phase, individuals with a karma score of at least 2,000 and those who have undertaken a minimum of 5,000 moderator actions will receive invitations to invest. The company has earmarked 1.3 million shares of its Class A stock to support community-driven initiatives.
Monetization Strategy and Collaborations
Reddit outlines data licensing and AI model training as integral components of its monetization strategy. The platform recently entered into a partnership with Google to train AI systems, a move projected to generate an annual revenue of $60 million.
Of particular note is the involvement of Sam Altman, the CEO of OpenAI and a notable figure in the tech industry. Altman has invested over $60 million in Reddit stock and currently commands 9.2% of the platform’s voting power. His association with Reddit dates back to 2014 when he initially invested as the president of Y Combinator, continuing to increase his equity stake through 2021.
As Reddit charts its path to going public, the involvement of its active user base in the IPO reflects a paradigm shift in investor engagement, showcasing the platform’s commitment to community involvement and a unique approach to democratizing access to its shares.
