Will Reddit's IPO Be Successful?
Kara Swisher (host), Scott Galloway (host)
In this episode of Pivot, featuring Kara Swisher and Scott Galloway, Will Reddit's IPO Be Successful? explores reddit’s High-Traffic Platform Tests IPO Market, Ad Model, And AI The episode examines Reddit’s long-awaited IPO as a bellwether for the broader tech and social media IPO market. Kara Swisher and Scott Galloway discuss Reddit’s massive traffic, relatively modest targeted valuation around $5 billion, and its heavy reliance on advertising revenue. They highlight the platform’s controversial but potentially lucrative $60 million data-licensing deal with Google, positioning it within the broader AI data gold rush. The hosts debate whether Reddit will emulate high-growth giants or stagnate like Pinterest and Snap, with Galloway expressing clear interest in buying the stock.
Reddit’s High-Traffic Platform Tests IPO Market, Ad Model, And AI
The episode examines Reddit’s long-awaited IPO as a bellwether for the broader tech and social media IPO market. Kara Swisher and Scott Galloway discuss Reddit’s massive traffic, relatively modest targeted valuation around $5 billion, and its heavy reliance on advertising revenue. They highlight the platform’s controversial but potentially lucrative $60 million data-licensing deal with Google, positioning it within the broader AI data gold rush. The hosts debate whether Reddit will emulate high-growth giants or stagnate like Pinterest and Snap, with Galloway expressing clear interest in buying the stock.
Key Takeaways
Reddit’s scale is under-monetized relative to its traffic.
As the third most trafficked site in the U. ...
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Advertising remains both Reddit’s core strength and vulnerability.
Like Meta and Google, Reddit relies heavily on ad revenue, leaving it exposed to macro ad cycles and market swings while still needing to improve ad products and yield per user.
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Data licensing offers a new, AI-driven revenue stream.
The $60M Google deal shows how Reddit’s rich, user-generated content can be monetized for AI training, potentially diversifying income beyond ads if more such deals follow.
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Community sentiment is a real business risk for data deals.
Power users and moderators are reportedly unhappy with licensing agreements, and alienating them could damage the very communities that create Reddit’s core value.
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Reddit’s IPO will be a litmus test for tech offerings in 2024.
With markets buoyed by names like NVIDIA, investors are waiting for a breakout IPO, and Reddit or Shein could either reignite or dampen enthusiasm for new tech listings.
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Execution will determine whether Reddit becomes a giant or stalls.
To avoid the ‘little engine that couldn’t’ fate of Pinterest and Snap, Reddit must better monetize traffic, harness AI, and maintain effective content moderation at scale.
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Retail and community investors are being unusually invited into the IPO.
Offering 75,000 power users IPO-priced shares is a notable move that could deepen loyalty but also heightens pressure to deliver early post-IPO performance.
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Notable Quotes
“This company is gonna go out supposedly at a valuation of five billion, and it's the third most trafficked site in the United States? Enough said.”
— Scott Galloway
“They've got a little bit of that AI spice on their meal.”
— Kara Swisher
“They can't be Pinterest and Snap that have kind of gone sideways and always end up being the little engines that couldn't.”
— Scott Galloway
“If they continue to be one of the most trafficked sites in the world, they can put an AI spin on this.”
— Scott Galloway
“I like him. He was really first on figuring out content moderation.”
— Kara Swisher (on Reddit CEO Steve Huffman)
Questions Answered in This Episode
How can Reddit materially increase revenue per user without alienating its communities or degrading the user experience?
The episode examines Reddit’s long-awaited IPO as a bellwether for the broader tech and social media IPO market. ...
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To what extent will data licensing and AI-related deals reduce Reddit’s dependence on advertising over the next 3–5 years?
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What safeguards should Reddit implement to balance monetizing user data with respecting privacy and community expectations?
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How can Reddit avoid the post-IPO stagnation seen at Pinterest and Snap and instead track closer to Meta or Google’s growth trajectories?
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Will giving 75,000 power users access to IPO shares create a more resilient shareholder base or heighten backlash if the stock underperforms?
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Transcript Preview
Reddit has filed to go public, finally. This will be the first major tech IPO of the year, and the first social media IPO since Pinterest in 2019, if you can believe it. The pa- the platform's bankers are looking for a valuation of at least $5 billion, not too big. It has 73 million daily active users and one of the most visited websites in the US. In an unusual move, Reddit will reportedly offer 75,000 power users the chance to buy shares at the IPO price. I think other companies have done similar things. First off, Reddit has been around since 2005. Um, this will be a test for IPOs in general. The adverti-... Their business is largely advertising, um, and, uh, now they just... There's been the... Probably the most controversial thing is this licensing, uh, data licensing agreement. They just announced a $60 million deal with Google last week, which I think people inside who use the company are not happy about. Um, so any thoughts? Talk to me, talk to me about this IPO.
Well, uh, first off, everyone's sort of waiting for the market to thaw, the IPO market, and it probably is beginning, or the atmospherics are lining up just because of the acceleration in the markets. The markets are reaching new highs and NVIDIA has totally inspired... Kind of the animal spirits appear to be returning. And there's several IPOs lined up and everyone's waiting for one to really pop, whether it's gonna be Reddit or Shein, which is kind of the biggest now, the biggest fast fashion company in the world. I like Reddit a lot. I actually think this IPO could be a, a real winner because, uh, I mean, the first thing I did is very basic. I type in "most trafficked sites in America." Number one is Google, number two is YouTube, number three, Reddit. And number-
Yeah, my kids use it.
... and number four is Facebook, number five, Amazon, number six, Pornhub, number seven, Wikipedia-
Mm-hmm.
... and number eight, Yahoo. And my attitude is-
Yahoo over Twitter? (laughs)
Isn't that crazy? I'm a shareholder in Yahoo.
No, Twitter's probably dead. Yeah.
But my thesis around Yahoo is the same as my thesis around Reddit and that is, remember those charts they always used to put out 10, 15 years ago saying, "Newspapers command 7% of people's attention, but they get 18% of the advertising revenue, whereas the internet is 30% of people's attention-"
Mm-hmm. Yeah, I remember that.
"... but only 9% money."
Yeah.
And over time, the two calibrate-
It's shifting.
... their two... They normalize. They come in line with each other.
Mm-hmm.
And so when you look at the most trafficked sites in the world, they are usually, you know, one plus trillion-dollar companies.
Mm-hmm.
And so this company is gonna go out supposedly at a valuation of five billion, and it's the third most trafficked site in the United States? Enough said.
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