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NEW YORK — Once considered among the dark alleys of the internet thanks to its lack of robust moderation, social media platform Reddit, now almost 20 years old, launched a turnaround effort in 2015 that raised the site's public persona, drew more users and set up a Thursday public stock offering to raise nearly $520 million on a company valuation of $6.4 billion.
For the uninitiated, Reddit is a platform comprising over 100,000 discussion communities, or subreddits, that self-organize under a wide range of topics and interests that include crowdsourcing, humor, politics, religion, food, lifestyle, pop culture, gaming and a whole lot more.
While Reddit ranks among the top 20 websites in the world by visitor traffic, it isn't a social media behemoth at the level of Facebook, Instagram or X. But the site does boast 73 million active daily users, 257 million weekly active uniques and over 1 billion cumulative posts.
A common knock on the company ahead of its IPO has been its failure to achieve profitability. Reddit co-founder Steve Huffman, who left the company in 2009 but returned in 2015 and has been the chief architect of its rebound, said in an interview with CNBC on Thursday morning that the company's revenues, generated almost entirely from digital ad sales, are on the upswing and hit $804 million in 2023, growing from a meager $12 million in 2015.
Will Reddit grow?
Huffman also touted how valuable the Reddit user demographic is from an advertiser standpoint and sees a huge upside for potential growth.
"What's special about Reddit is whatever you're into, whatever you're going through, whether you're getting into college, getting your first jobs, going through relationship ups and downs, whatever health malady you have … it's all on Reddit," Huffman said. "Reddit is all about context and interest. Every brand's customer is on Reddit somewhere.
"There's no constraint on how big the ad business can be."
Reddit also bucked convention in how it structured its IPO, making a highly unusual decision to make stock available at the retail level, through an 8% allocation of available stock, around 1.8 million shares available to Reddit users as well as additional allocations through online retail brokers.
Huffman said the move was a no-brainer and one that reflects Reddit's core principles.
"Our goal was to bring in users, as is the ethos of Reddit, and level the playing field," Huffman told CNBC. "Bring people in on the same terms of professional investors."
A 'crazy place'
Huffman also responded to some investment industry commentary that content produced by some subreddits themselves, in combination with retail stock sales that don't have the lockout constraints of the IPO's institutional investors, could bring volatility to Reddit's public markets debut.
Chief among the concerns was how the popular "wallstreetbets" subreddit, which exploded in popularity amid the meme stock surge a few years ago, could impact Reddit's coming out party. While commentary in r/wallstreetbets has been mixed, some users suggested the best play was to short Reddit stock, an investment strategy that bets on a stock losing money over a certain time period.
Huffman said he embraces the diverse opinions and pessimism found on Reddit and noted that's really the whole point of the platform.
"I love wallstreetbets," Huffman said. "I'm a user, I've seen their comments over the last couple of weeks, I send them my regards and, again, that's Reddit. Reddit is people. Reddit is a fun and special but sometimes crazy place.
"And I wouldn't expect less from our communities."
Reddit shares opened 38% above the IPO pricing of $34 per share and were trading at nearly $51 per share at midday on Thursday.
