Will Reddit’s IPO bet pay off?
Reddit has been around since 2005, but its IPO came over a decade after most of its early social media peers like Facebook, Instagram and Twitter, now X. So, why did it go public in March?
When the company first launched, most social media companies shared the same business model.
“We’ll raise all the venture capital we can get our hands on and we’ll spend it like water,” said Erik Gordon at the University of Michigan.
But Reddit was different according to Gordon — it was frugal in those early years. And that meant it didn’t have pressure from investors, “Beating them on the head saying ‘go public, go public.'” And telling the company it better start turning a profit, which it hasn’t in nearly 20 years.
But the billions of user posts and replies on Reddit recently got a lot more valuable, said Joshua White at Vanderbilt University.
“They have a vast trove of content that platforms like Google can use to train its AI models,” he said.
Specifically, to train them on conversations between regular people, rather than literature or professional writing.
White says today’s quarterly earnings report, the company’s first since it’s IPO, will give us a look at how efforts to monetize all that content with ads and AI training deals are panning out.
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