Reddit, one of the largest forum platforms in the world, is preparing to go public: Thursday February 22, the American company filed with the Securities and Exchange Commission (SEC), the American authority for financial markets, its proposed listing on the New York Stock Exchange. The date has not yet been determined at this stage but, if the procedure is completed, it would be the first introduction of a social network since that of Pinterest in 2019.
In documents available on the SEC website, Reddit mentions having an average of 73 million daily active users and over 267 million weekly users. However, despite its undeniable success with the public, the platform with 100,000 forums (on celebrities, video games, social issues or even businesses), founded in August 2005, has never managed to generate of profits.
Like Facebook, Instagram, YouTube or TikTok, Reddit’s business model is based on advertising, but it has never risen to their level. It achieved more than $666 million (€615 million) in revenue in 2022 and $804 million (€742 million) in 2023 – for comparison, TikTok’s revenue exceeded $5.1 billion (4.7 billion euros) in 2022. It reduced its net losses from 159 million dollars in 2022 to 91 million last year.
Reddit plans to reserve approximately 1.3 million common shares to fund programs that allow its users to “realize their ideas”or approximately 1% of the shares issued. “I have never been more excited about the future of Reddit than I am today”commented Steve Huffman, co-founder and chief executive officer of the company, in a letter attached to the prospectus filed with the SEC.
An agreement to train Google AI
For example, he mentioned growth opportunities through advertising, online commerce on the platform or even the marketing of data licenses for groups specializing in artificial intelligence (AI). The launch of the procedure to enter the stock market also comes in parallel with another announcement made on Thursday: Reddit reached a deal with Googleto the tune of 60 million dollars (55 million euros), allowing the digital giant to use messages posted on Reddit forums to improve the quality of its search engine as well as train its AI models .
“Reddit is one of the largest, constantly updated bodies of authentic human experience”underlined Steve Huffman. “The data continually grows and regenerates as users chat. We hope that our data advantage and intellectual property will continue to be a key part of training future language models”he concluded.
Language models are at the heart of generative AI, which will explode in 2023 with the success of ChatGPT. These mathematical models are fed with mountains of data to then be able to generate text, images, sounds or even computer code upon simple query in everyday language.
Last June, Reddit raised the prices charged to third-party publishers to use data and conversations posted on the social network, in order to prevent generative AI giants (OpenAI, Google, Microsoft, etc.) from exploiting the content for free. from its forums. The decision sparked an outcry and led to a large strike movement among its administrators, because many small developers designed applications linked to the platform on the basis of moderate prices or even free access to its programming interface (API). More recently, the company announced the launch of a remuneration system for the authors of the most popular messages on its pages.
Reddit had already shown its power in January 2021, when armies of stock marketers, communicating on the platform, shook Wall Street by betting against the tide on stocks that had gone viral, such as those of the video game store chain GameStop. . Created by two students from Virginia (eastern United States), Reddit was bought in 2006 by Condé Nast (publisher of magazines Vogue, The New Yorker And Vanity Fair). The company became an independent subsidiary in 2011.