A Look At Reddit’s Biggest Shareholders Ahead Of Its IPO

San Francisco-based Reddit, co-founded by CEO Steve Huffman and venture investor Alexis Ohanian more than 18 years ago, is finally going public Thursday on the New York Stock Exchange. 

Reddit’s IPO will be closely watched for a number of reasons. Its IPO is the first from a social media company since Pinterest’s debut in 2019. Startup investors and entrepreneurs are also hoping the IPO, which follows a prolonged drought for new tech offerings, could help kickstart the IPO market again. 

Reddit will trade on the NYSE under the ticker symbol RDDT. Its targeted share price is $31 to $34 at a value up to $6.4 billion upon listing. 

In an unusual move, the company is offering 74,000 of its active moderators and users the opportunity to purchase stock at the price set the day before the company goes public, in order to give them access to some upside should the stock increase over time.  

Reddit’s biggest shareholders

Reddit was founded in the summer of 2005, as part of the first Y Combinator accelerator class, alongside only eight other companies. 

It came about in the Web 2.0 era, a period defined by the birth of user-generated content platforms that also birthed Facebook (now Meta), Twitter (now X) and YouTube. 

Within 18 months of Reddit’s founding, media company Advance Publications, owner of magazine publisher Condé Nast among other properties, acquired the startup for $10 million. 

Advance remains the largest shareholder in Reddit, with a 30.1% ownership of the company, according to securities filings. 

Other leading shareholders include investors who have led fundings in Reddit since 2014: 

• Chinese tech conglomerate Tencent led Reddit’s Series D of $300 million in 2019 and now owns 11% of the company. 
• Fidelity led Reddit’s $420 million Series F, valued at $10 billion. The firm, which also invested in earlier rounds, now owns 9.5% of Reddit.
• Entrepreneur and investor Sam Altman, now CEO of OpenAI, led Reddit’s Series B of $50 million in 2014. His investment properties still own 8.7%, according to filings.
• Quiet Capital and Tacit Capital combined own 6.8% and first invested in the Series C round. 
• Vy Capital led Reddit’s Series E of $368 million in 2021 and now owns 5.1%. 

Venture firms Andreessen Horowitz and Sequoia Capital have also both invested in Reddit, but do not own more than 5%, according to filings. 

By the numbers: Funding, revenue and growth

Reddit has raised more than $1.3 billion from investors since its founding, according to Crunchbase.

Its 2023 revenues totaled $804 million, up 21% year over year, according to filings. On its IPO roadshow, the company indicated it expects to grow around the same proportion in 2024. A new revenue stream inked in January includes a $60 million a year deal for three years with Google to train AI models. 

On Friday, the company said in filings that the U.S. Federal Trade Commission has opened an inquiry into its AI data licensing business, which the company has said could bring in more than $200 million in revenue over the next few years.

Reddit hosts approximately 100,000 forums, called subreddits, on niche to broad topics, all managed by its community of users. The platform gained more mainstream attention for its r/wallstreetbets subreddit and that forum’s role in the “meme stock” phenomenon characterized by the GameStop trading flurry in 2021. 

The site had an average 73 million daily active users in the fourth quarter of 2023, up 27% over the previous year, according to its filings, and user growth has increased in the last two quarters. Still, the company has run at a loss each year.

Illustration: Dom Guzman