Reddit, the popular social media platform, experienced a successful first day of trading on the New York Stock Exchange, with its shares closing 48% higher. The company priced its shares at $34 each, near the top of the marketed range, and by the end of the trading day, its shares reached $50.44, valuing the firm at over $9 billion.
Founded almost 20 years ago, Reddit has grown to become one of the most visited websites globally, with over 73 million users as of December 2023. Despite its popularity, the platform has struggled to turn a profit, leading to questions about how a business can monetize random conversations and user-generated content.
In an effort to increase profitability, Reddit has turned to artificial intelligence (AI) models, with companies like OpenAI paying for data from the platform’s discussions. Reddit has already secured licensing deals worth over $200 million, which could help offset the $90.8 million loss reported in 2023.
However, Reddit faces challenges on the horizon, including increased regulatory scrutiny and accusations of patent infringement from mobile phone firm Nokia. Additionally, the platform acknowledges the potential risk posed by its user base, highlighting the need to retain and engage users to attract advertisers.
Despite user frustrations with changes on the platform, Reddit’s lack of significant rivals gives it a competitive edge in the social media landscape. As the company navigates its newfound status as a publicly traded entity, its success may ultimately hinge on its ability to maintain user engagement and revenue growth while addressing regulatory concerns and legal challenges.