He achieved this using a unique strategy
19 years ago, just a year before Facebook launched (a 2021 goal), two roommates from the University of Virginia founded Reddit. This social platform soon became meeting and discussion place for millions of people, taking a privileged place among the most visited websites in the world. Surprisingly, the company has been losing money for almost two decades, but the situation has only now changed.
Reddit is profitable. The company, led by Steve Huffman, made a profit for the first time in its history. This is $29.9 million, which corresponds to the balance of the third quarter of 2024. As we can see from its financial results, we are in for a noticeable change from the same quarter last year, where losses totaled $7.4 million.
From losing money to making a profit
This milestone in the development of the platform is accompanied by a favorable scenario on several fronts. advertising income increased by 56% year-over-year to $315.1 million, while the “other” category, which includes licensing agreements signed with both Google and OpenAI, recorded revenue of $33.2 million, representing an impressive 547% increase.
Sole Daily Assets grew 47% year-over-year. That means Reddit now has 97.2 million users who interact with the platform every day, participating in discussions, sharing content, and creating strong communities. Although there were also controversies: subreddits containing explicit materials or posts promoting hatred.
According to Huffman, part of the increase in users is due to recent translation functions which enabled a platform that allowed the subreddits’ content to reach many more people than those communicating in the original language, mostly English. At the moment, publications can be translated into Spanish, Italian, French and German.
Steve Huffman, CEO and co-founder of Reddit
The fact that a firm achieved profitability had a direct impact on its market capitalization. Its shares were trading at $81.70 on Tuesday afternoon. They jumped more than 35% at the market open today, reaching $110.60. The fact that we’re talking about a publicly traded company is also one of the reasons why Reddit seems to have changed its present.
Reddit formalized its intentions to go public in February of this year. And he did this with the help of Form S-1, in which he promised to grow his business through advertising, as well as through licensing your data companies so they can train their artificial intelligence models. The form also revealed other very interesting information about the social platform.
Major shareholders included Huffman himself, with a 3.3% stake in the company, as well as Advance Publications (30.1%), the parent company of Condé Nast, which bought Reddit in 2006; Chinese tech giant Tencent (11%) and OpenAI CEO Sam Altman (8.7%). The performance went according to expectations. Reddit is now profitable and has a market value of about $19 billion.
Images | Hataka with DALL·E 3 | Web Summit (CC BY 2.0)
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