Reddit

Overview

Reddit is a San Francisco-based social media platform organised into more than 100,000 user-run communities called subreddits, where volunteers set each community’s rules and users vote posts up or down. Founded in 2005 by Steve Huffman and Alexis Ohanian, it went public in March 2024 and earns its revenue from advertising and from licensing its archive of human conversation to AI companies (Associated Press; TechCrunch).

This profile covers Reddit the company — not any individual subreddit — and follows it from a dorm-room project through its sale, its long unprofitable years, and its transformation into a public company whose most valuable asset is the conversation its own users produce and police.

From a dorm room to Condé Nast to the stock market

Reddit was founded in 2005 by Alexis Ohanian and his dorm-mate at the University of Virginia, Steve Huffman, as a gathering place for discussing politics, television, memes and more (Associated Press). Not long after it was born, it was sold to magazine publisher Condé Nast for $10 million, a deal that meant it did not need to run as a standalone business (Associated Press). Even after Condé Nast’s parent, Advance Magazine Publishers, spun Reddit off in 2011, the company said in its IPO filing that it did not begin to focus on generating revenue until 2018 (Associated Press).

Both founders left in 2009 while Condé Nast was still in control, and the company went through years of leadership turmoil. Huffman returned as chief executive in 2015, after Ellen Pao resigned as CEO amid a backlash over community bans and the firing of Reddit’s talent director (Associated Press). Ohanian left Reddit in 2018 and stepped down from its board in 2020 (Associated Press). The site meanwhile became known for “AMAs”, or ask-me-anything sessions with prominent figures including Barack Obama, Richard Dawkins and Harrison Ford, and in 2021 its WallStreetBets community helped organise small investors who sent GameStop stock soaring more than 1,700 percent (Associated Press).

By the time of its IPO, Reddit was extraordinarily small for its age by tech-industry standards: about 76 million users visited roughly 100,000 communities in December 2023, and revenue had grown from $229 million in 2020 to $804 million in 2023, mostly from selling ads — but the company had never turned an annual profit and had piled up cumulative losses of $717 million (Associated Press). It priced its IPO at $34 per share, at the top of its $31 to $34 range, and began trading on the New York Stock Exchange on 21 March 2024 under the ticker RDDT, raising about $748 million in total, of which about $519 million went to Reddit itself (Associated Press). Shares opened at $47 and closed the first day at $50.44, up 48% on the offer price (Associated Press). Unusually, about 8% of the IPO shares were set aside for the site’s superusers, with each allotment determined by “karma”, a reputation measure based on a user’s contributions (Associated Press). Its largest shareholder at the IPO was Advance Magazine Publishers, with about a third of the shares, followed by Tencent and by OpenAI chief executive Sam Altman (Associated Press).

Who actually runs Reddit: the volunteers — and the 2023 revolt that priced their work

Reddit’s defining governance feature is one most company profiles treat as background, but it is the engine of the whole business: the communities are created and moderated by volunteers, and the site’s decentralised model means it hosts a vast range of user speech without centralised editorial control (Electronic Frontier Foundation). Reddit’s chief legal officer, Ben Lee, describes a tiered structure “like our federal system”: each community is like a state, has its own rules, and enforces them, and the vast majority of content moderation decisions are made by the communities, not by Reddit itself, with volunteers supported by automated tools (Electronic Frontier Foundation). Voting is part of the same system — up-voting determines what becomes visible, so that, in Lee’s words, “on Reddit, everyone is a content moderator, through voting” (Electronic Frontier Foundation). Associated Press reporting makes the same point from outside the company: scores of volunteer moderators decide the rules of each community, “a level of autonomy unusual for a social network the size of Reddit” (Associated Press).

That bargain broke open in 2023. In April that year Reddit announced it would charge third-party developers for access to its data, which had previously been free (NPR). From 12 June, thousands of communities went private for 48 hours in protest, with organisers putting participation at nearly 9,000 subreddits, and third-party apps including Apollo, Reddit is Fun and ReddPlanet said they would shut down because the fees made them unviable (NPR). Huffman argued Reddit needed to be self-sustaining and could no longer subsidise commercial entities requiring large-scale data use, pointing out that generative AI tools scraped Reddit’s conversations without paying much for them; he also said about 90% of third-party apps could still access data for free (NPR). The protest did not reverse the policy, and Huffman later framed the moment bluntly: “We’re 18 years old. I think it’s time we grow up and behave like an adult company” (Associated Press). The information gain here is the sequence itself: the blackout was not just a protest about apps, it was the moment Reddit publicly repriced the volunteer-produced conversation that its business would then sell.

The business model: advertising, and selling the conversation itself

Advertising remains the core business, and it accelerated sharply after the IPO. Reddit reported $690 million in advertising revenue for the fourth quarter of 2025, up 75% year over year, and $2.1 billion in advertising revenue for full-year 2025, topping $2 billion for the first time and up 74% on 2024, with advertising revenue growing at least 60% in each quarter of the year (AdExchanger). Average daily active unique users reached 121.4 million in that quarter, up 19% year over year, and revenue from lower-funnel objectives such as purchase conversions and app installs doubled, as did revenue from small and midsize businesses (AdExchanger). Its AI search product, Reddit Answers, did not yet feature ads, but chief operating officer Jen Wong called it an “enormous” opportunity for future growth (AdExchanger).

The second revenue line is newer and more distinctive: charging AI companies for the conversation itself. In January 2024 Reddit entered data licensing arrangements with an aggregate contract value of $203.0 million and terms of two to three years, expecting a minimum of $66.4 million to be recognised in 2024, and said its growing platform data would be a key element in training leading large language models (TechCrunch). Its deal with Google was reported at about $60 million a year, though neither company confirmed that figure in the sources read, and the arrangement drew an inquiry from the US Federal Trade Commission (Associated Press). In May 2024 Reddit signed a deal with OpenAI giving it access to Reddit’s Data API — real-time, structured, unique content — to bring Reddit content to ChatGPT and new products, while OpenAI became a Reddit advertising partner and Reddit gained AI-powered features built on OpenAI’s models; the deal’s value was not disclosed (The Register). The commercial logic is circular in a way no other large platform quite matches: volunteers moderate the conversation for free, users generate it for free, and Reddit now sells structured access to it — having first charged the third-party apps that used to distribute it for free.

What this profile does not claim

• Reddit’s IPO valuation is reported two ways because the share counts differ: Associated Press reports a $6.4 billion market value at the $34 price, while TechCrunch calculates about $5.4 billion on 158.98 million shares outstanding, noting others reached $6 billion or more including employee options. No single valuation is asserted as the only correct one.
• The Google data deal figure of about $60 million a year is press-reported, not confirmed by Google or Reddit in the sources read, and Reddit’s S-1 aggregate of $203 million does not name its buyers, so no buyer-by-buyer split is claimed.
• The OpenAI deal’s value was not disclosed in the sources read and is not estimated here.
• Daily users at the IPO are given as about 76 million for December 2023; Associated Press’s IPO-day piece gives 73 million daily visitors, likely a different reference date, and the difference is not resolved.
• Governance claims drawn from the EFF interview are Reddit’s own account of its system, given by its chief legal officer; they are corroborated on the volunteer-moderation fact by Associated Press reporting, but the profile does not present Reddit’s legal characterisation of Section 230 as an independent legal finding.
• This profile does not cover individual subreddits, Reddit’s post-2025 financial results beyond the fourth-quarter 2025 figures reported in February 2026, or the outcome of the Federal Trade Commission inquiry, none of which were covered in the sources read.