Reddit goes public, OpenAI CEO Sam Altman to gain the most from IPO: Report

Two decades after its launch, social media platform Reddit made public its paperwork for an initial public offering (IPO) in the United States on Thursday. Sam Altman, CEO of OpenAI, is set to gain the most from the IPO due to his early investments in the company. Altman is the third largest shareholder in the online discussion website, Reddit stated in its IPO prospectus.

Altman holds 9.2% of voting power ahead of Reddit’s initial public offering, according to information in the company’s prospectus, CNBC reported on Thursday. This includes 789,456 Class A shares and 11.4 million Class B shares. Reddit’s largest shareholder is Advance Magazine Publishers Inc., part of the Newhouse family publishing empire, with about a third of the voting power. That would value Altman's stake at roughly $435 million.

Altman was a member of Reddit's board of directors, where he served for seven years until 2022. Throughout this period in the corporation's history, there were notable changes and restructures at the executive level, including terms of Yishan Wong and Ellen Pao as CEOs.

Furthermore, Altman temporarily filled the role of Reddit's CEO himself in 2014 shortly after Wong resigned. His term was just for 8 days. In 2014, Altman led Reddit’s $50 million Series B funding round, after using the service every day for nine years.

Established in 2005, Reddit boasts a significant daily user base amounting to approximately 76 million constituents and successfully manifested $804 million in revenues as of last year alone - which indicates a growth trajectory that culminates at an impressive increment of 21% on a year-on-year basis.

The social media platform submitted its filing with the US Securities and Exchange Commission (SEC) and will go public on the New York Stock Exchange under the ticker symbol “RDDT.”

Other prominent stakeholders in Reddit are Steven Newhouse, Co-President of Advance Magazine Publishers, with 30.1% stake, Chinese tech giant Tencent with 11% stake. Steve Huffman, Reddit's esteemed co-founder and CEO, has 3.3% of the organization's equity though his authority is impacted by voting proxy in relation to the Advance Magazine stake as outlined in company filings.

Financially, Reddit showcased a noteworthy improvement, reporting a net loss of $90.8 million on revenue of $804 million in 2023, compared to a net loss of $158.6 million on revenue of $666.7 million in the previous year.

Reddit IPO

In its IPO prospectus, Reddit touted its links to the current AI boom. "Our content is particularly important for artificial intelligence (“AI”) – it is a foundational part of how many of the leading large language models (“LLMs”) have been trained," the company said in the filing.

As part of the IPO, Reddit will offer shares to some of its users and moderators, known colloquially as Redditors.

In its initial public offering (IPO) documentation, Reddit declared that a portion of its surplus capital had been directed towards investments in Bitcoin (BTC) and Ether (ETH).

The social media entity disclosed a strategic allocation of surplus cash into well-known cryptocurrencies, Bitcoin and Ether. Furthermore, it revealed that this innovative platform has leveraged Ether and Polygon (MATIC) for settling transactions involving specific virtual commodities. The organization intimates continued implementation of this progressive investment approach in the foreseeing future.

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