Topic: Reddit (original) (raw)

Reddit entered the public market in 2024, in one of the most-waited social media IPOs and the first in the last 15 years. With an annual revenue of 1.3 billion U.S. dollars in 2024, and a projected valuation of 6.5 billion U.S. dollars, Reddit qualifies within the lower end of the social media businesses. However, community engagement and high user participation make Reddit one of the most promising social media platforms on the digital scene, especially when it comes to advertising possibilities.

Monetizing existing assets: Reddit’s API access

Reddit is an advertising-based business. In 2024, the company reported that almost 91 percent of its revenues for the year came from online advertising: 1.18 billion U.S. dollars, against 114 million U.S. dollars generated in its other revenue segment, which includes direct monetization with user subscriptions.

In 2023, Reddit took its most promising step to diversify the company’s revenue stream by monetizing access to its application programming interface (API). Thanks to its primarily text-based format, Reddit has access to a rich repository of human experiences and an unparalleled pool of data that can AI in shaping large AI models and better tuning machine learning programs Google was one of the first to jump on the possibility of accessing Reddit’s human content repository for a price: in February 2024, industry sources reported Reddit had struck a licensing deal with the search engine giant for 60 million U.S. dollars.

Company financial and reported engagement

Reddit reported a net loss of 484 million U.S. dollars in 2024. While this represents a significant increase from the 91 million U.S. dollars in losses recorded in 2023, Reddit is not yet among the profitable social media businesses. The company’s earnings before taxes, depreciation and amortization (EBITDA) amounted to almost 300 million U.S. dollars.

The company chose to report its average revenues per user (ARPU) based on daily engagement. As of the fourth quarter of 2024, Reddit’s ARPU was 4.21 U.S. dollars, an increase from the 3.42 U.S. dollars the social aggregator saw at the end of 2023.

AI and content: Reddit’s future perspectives

After almost 20 years after its first launch, Reddit has climbed the social media ladder and cut out a place for itself, solidifying its position by entering the public market in 2024. Despite having lower revenues compared to its Meta-powered competitors or video-based sensation TikTok, its position as a text-based social media and forum platform makes it one of the most promising platforms for users to engage with AI. Besides benefiting from licensing the platform's content, Reddit has been working to create new products, such as Reddit Answers, to help users harness the power of AI search processes to find posts and comments.

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