👉 Background: Reddit was founded in 2005 as the self-proclaimed “front page of the internet”, where users upvote and downvote content across thousands of topic-based forums called subreddit. One of its most famous moments was in the subreddit r/WallStreetBets, which helped spark the 2021 GameStop short squeeze.

‍👉 What happened: Reddit listed on the New York Stock Exchange (NYSE) in March 2024, but has now announced a boom in its quarterly update. We're talking $500 million in revenue for the quarter, which is up 78% compared to the same quarter last year. On top of that, its daily active users rose 21% year over year to reach 110 million.

‍👉 What else: While 93% of Reddit’s total revenue came from ads, it also generated "Other revenue" in this quarter from AI companies like OpenAI and Google. This revenue stream grew 24% to $35 million. And, these results got Reddit’s investors veeeery excited. Next minute: Reddit's share price was up 32% over the past 5 days.

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‍What's the key learning?

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‍💡It’s not just about ad dollars anymore, it’s about data dollars. When you’ve got billions of posts, comments and spicy debates, you’ve also got a goldmine of data.

💡Reddit has built a business on user-generated content that’s raw, real, and often very weird. And now they’re managing to monetise more effectively in two key ways:

1. They’re helping advertisers build more targeted ad campaigns
2. They’re selling access to that same data to AI companies

💡AI companies pay for this because large language models (LLMs) need huge amounts of human language data to learn how to respond like a real person. And Reddit has a LOT of posts and a LOT of everyday people talking about everyday things. In fact, there are 1.2 million new posts per day... along with roughly 7.5 million comments daily.