He has achieved it with a peculiar strategy

19 years ago, just one year apart from the launch of Facebook (Goal from 2021), two University of Virginia roommates founded Reddit. This social platform soon became a meeting and discussion point for millions of people, reaching a privileged place among the most visited websites in the world. Surprising as it may seem, the company has been losing money for almost two decades, but this has just changed.

Reddit is profitable. The firm led by Steve Huffman has made profits for the first time in its history. This is 29.9 million dollars that correspond to the balance of the third quarter of 2024. As we can see in its financial results, we are facing a notable change compared to the same quarter of the previous year, where losses stood at 7.4 million dollars.

From losing money to generating profits

This milestone for the platform comes accompanied by a favorable scenario on several fronts. advertising revenue increased by 56% year-on-year to $315.1 million, while the “other” category, which includes licensing agreements signed with both Google and OpenAI, recorded $33.2 million in revenue, a spectacular 547% increase.

The Sole Daily Assets grew by 47% compared to the previous year. That is, Reddit now has 97.2 million users who interact on the platform every day, participating in discussions, sharing content and generating solid communities. Although controversy has also been present, with subreddits that include explicit material or publications that promote hatred.

According to Huffman, part of the increase in users is due to recent translation functions that incorporated the platform, allowing the content of the subreddits to reach many more people than those who interact in the original language, mainly English. At the moment, publications can be translated into Spanish, Italian, French and German.

The fact that the firm has achieved profitability had a direct impact on its market capitalization. Its shares were trading at $81.70 on Tuesday afternoon. At today’s market opening they had jumped more than 35%, reaching $110.60. The fact that we are talking about a listed company is also one of the reasons why Reddit has apparently changed its present.

Reddit formalized its intentions to go public in February of this year. And he did it with an S-1 form in which he promised to grow his business through advertising, as well as through licensing of your data to companies so they can train their artificial intelligence models. The form also revealed other very interesting information about the social platform.

Among the main shareholders were Huffman himself, with 3.3% of the company, but also Advance Publications (30.1%), parent company of Condé Nast, which bought Reddit in 2006; Chinese tech giant Tencent (11%) and OpenAI CEO Sam Altman (8.7%). The play has gone according to expectations. Reddit is now profitable and has a market value of about $19 billion.

Images | WorldOfSoftware with DALL·E 3 | Web Summit (CC BY 2.0)

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