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  1. Reddit to go public today on New York Stock Exchange; all you need to know about the social media platform

Reddit to go public today on New York Stock Exchange; all you need to know about the social media platform

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2 min read • Updated: March 21, 2024, 5:26 PM

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Social media platform Reddit is all set to list on the New York stock exchange, in one of the biggest social media IPO since Pinterest. Reddit’s IPO brings focus on its financial feasibility and data licensing deals with AI players to stay profitable.

Reddit app visible inside a smartphone screen

Reddit is all set to list its shares on the New York Stock Exchange on Thursday, as Wall Street awaits the IPO of the nearly two-decade-old social media platform.

Reddit, which was founded in 2005, has priced its initial public offering at the top of its projected range at $34 per share, taking its valuation to $6.4 billion. The IPO consists of 22 million shares, of which approximately 15.3 million shares are being sold by Reddit, while the remaining 6.7 million shares are being sold by existing shareholders.

The platform, founded by Alexis Ohanian and current CEO Steve Huffman, allows users to create discussion forums, also known as ‘subreddits’, to discuss and share information on anything and everything under the sun.

Reddit’s IPO is bringing a billion-dollar question to the forefront: how will the company make money from chat forums and discussion rooms? The answer is they don’t, which is evident in the fact that Reddit is yet to post a profit. The website is completely free for people to use and does not have a premium subscription model.

For the year ended December 31, 2023, the company reported a loss of $90.8 million as compared to $158.6 million last year. It also revealed in its IPO filing a revenue growth of 21%, with total revenue of $804 million. As of December 31, the platform had more than 73 million daily active users and nearly 100k communities, according to its website.

Contrary to popular perception, it is not advertising bucks but AI dollars that investors hope will drive Reddit’s profitability. They are banking on the company's inclination towards licensing user data to train AI language models.

Last month, Google announced a collaborative partnership with Reddit, which would allow Google to access Reddit’s data, including real-time information about the thoughts, habits, and activities of its users. This collaboration, which is reportedly worth $60 million, aims to enhance Google’s AI model.

Not only this, Sam Altman, founder of OpenAI, the company behind ChatGPT, has a personal stake in the company. Altman owns about 12.2 million shares of Reddit. He was also the CEO of Reddit for a brief period in 2014, after the company was sold by Conde Nast Publications back in 2011.