According to co-founder and CEO Steve Huffman, new investors should not label Reddit (RDDT) as an AI play, even after a lucrative deal with tech giant Google (GOOG, GOOGL). Huffman suggests that investors view Reddit as a community platform with multiple paths to success. While Reddit is pursuing deals that involve feeding its data to large language models (LLMs), the company is also focused on gaining a larger share of the advertising market. Initially expected to price its IPO between $31 and $34 per share, Reddit ended up pricing its IPO at $34, resulting in an initial valuation of $6. 4 billion. The fully diluted valuation fell short of the $10 billion it achieved in a 2021 funding round. The stock began trading at $47 per share and quickly rose above $53. This IPO marks the first major social media IPO since Pinterest (PINS) in 2019. It has been a long journey for Huffman and the Reddit team to reach this point. Huffman and Alexis Ohanian founded Reddit in 2005 and sold it to Conde Nast a year later. After several CEO changes, Ohanian returned as executive chairman in 2014, followed by Huffman's return as CEO a year later. Huffman has since steered the company through controversies surrounding content moderation, the meme stock phenomenon, and a shift towards advertising revenue.

Reddit recently entered a $60 million deal to license its data for training Google's LLMs, and investors were attracted by the potential for more AI licensing deals during the IPO roadshow. Notably, Ohanian left Reddit in 2020 and requested that his board seat be given to a diverse candidate. Reddit has never turned a profit in its nearly 20 years of operation, but it saw a 21% increase in sales in 2021, reaching $804 million. However, the company experienced a net loss of $90. 8 million, and it currently has approximately 73 million daily users. Huffman declined to disclose whether Reddit is expected to be profitable in 2024. It is worth mentioning that AI kingmaker Sam Altman and Chinese tech giant Tencent are among Reddit's largest shareholders. Huffman received total compensation of $193. 2 million in 2023, including options awards and stock awards. The SEC filing highlights that Huffman holds 662, 447 PRSUs for Class B common stock, which will vest upon the company achieving a $5. 0 billion market capitalization valuation after the IPO. The risk factors section of the filing mentions the GameStop (GME) and AMC (AMC) meme stock trading saga. Additionally, 1. 76 million shares were reserved for the Reddit user base to purchase.