Sam Altman is set to be one of biggest winners in Reddit’s IPO, with a stake that could be worth $435 million
Sam Altman, the CEO of OpenAI, could be one of the biggest winners in Reddit's initial public stock offering.
Altman is the third largest shareholder in the online discussion website, with an 8.7% stake, Reddit revealed when it released its IPO prospectus on Thursday. While the S-1 filing did not specify the price at which Reddit will seek to sell shares the forthcoming IPO, Bloomberg has reported that the company is looking for a valuation of at least $5 billion. That would value Altman's stake—consisting of 789,456 Class A shares and 11.4 million supervoting Class B shares—at roughly $435 million.
It's not clear if Altman intends to sell shares in the offering, but the value of his stake underscores the extent to which the 38-year-old techie has emerged as one of Silicon Valley's most influential, and well-positioned, entrepreneurs. Altman is currently the CEO of ChatGPT maker OpenAI, which ignited the current boom in generative AI and is currently valued at roughly $86 billion.
Altman's association with Reddit dates back to at least 2014, when he invested in the company's Series B funding round, according to Business Insider. He also invested in Reddit's Series C round in July 2017, when the firm was valued at $1.8 billion, per Axios. Altman was also a director on Reddit's board for seven years, serving until 2022. During that period, Reddit went through numerous internal shake-ups with a rotating cast of CEOs including Yishan Wong and Ellen Pao. Altman himself served as Reddit's CEO in 2014 for just over one week after Wong's resignation.
Altman was Reddit's CEO for 8 days
"Although my 8 days as the CEO of reddit have been sort of fun, I am happy they are coming to a close and I am sure the new team will do a far better job and take reddit to great heights," Altman said in his blog at the time, signing off with a competitive jab that "during my very brief tenure, reddit added more users than Hacker News has in total."
Other large shareholders in Reddit include Steven Newhouse, the co-president of Advance Magazine Publishers, which has a 30.1% stake, and Chinese tech company Tencent, which has a 11% stake. Reddit cofounder and CEO Steve Huffman has a 3.3% of the company's shares, though the Advance Magazine stake is subject to his voting proxy, according to the filing.
Founded in 2005, Reddit has 76 million daily users and generated $804 million in revenue last year, up 21% year-over-year.
The company's IPO filing is being closely watched by investors and other tech companies, amid a nearly two year drought in stock offerings. Despite the pent up investor demand, Reddit's red ink— the company posted a net loss of $90.8 million last year—could affect Wall Street's appetite for the stock.
In its IPO prospectus, Reddit touted its links to the current AI boom. "Our content is particularly important for artificial intelligence (“AI”) – it is a foundational part of how many of the leading large language models (“LLMs”) have been trained," the company said in the filing. Earlier on Tuesday, Reddit and Google announced a deal—pegged at $60 million a year by Bloomberg—allowing the tech giant to train AI technology on Reddit's content.
It's unclear whether Altman's OpenAI has a similar deal with Reddit, although publishers like The New York Times have sued OpenAI for using their data without permission.
More Reddit IPO coverage from Fortune:
Reddit’s ‘unusual’ move to reward loyal users in its IPO could prove lucrative for Redditors
This story was originally featured on Fortune.com
