Success and New Horizons
Reddit continues to evolve, and after 19 years of setbacks, during which the company reported continuous losses, it finally recorded its first quarterly profit after the IPO last year. On October 30, Reddit announced a net profit of $163 million, marking its fifth consecutive profitable quarter.
Reddit's stock received a positive response in the market. On October 31, it closed at $208.95, which is 7.5% higher than the previous day and 75% higher than a year ago. This led to an increase in Steve Huffman's net worth to $1.2 billion.
“The third quarter was very successful,” Huffman noted on October 30 during a press conference, describing Reddit as a platform “for people, created by people.” He also indirectly commented on the issues with low-quality content generated by AI: “Reddit occupies a unique position—we are not trying to be a new version of something existing. Our goal is to become the best version of ourselves and provide users with what they truly need—a place for discussions on any topics and finding useful information.”
Genuine recommendations from real people become especially valuable in an internet flooded with bots and advertising content. Users consider Reddit a more reliable source of information. Since the summer of 2023, the number of active users on the platform has doubled. Additionally, according to Semrush data, links to Reddit are increasingly appearing in Google search results, which has allowed organic traffic to increase by more than 560% compared to two years ago.
Despite the emergence of a whole class of billionaires thanks to Facebook and LinkedIn in the early 2000s, Huffman has only now become part of this club. In September, Reddit ranked seventh in global traffic, surpassing LinkedIn, TikTok, and Netflix. However, this occurred because Huffman sold his stake in the startup back in 2006.
A year after its launch in June 2005, Huffman and his partner Alexis Ohanian, now a venture capitalist, sold their platform to Condé Nast for $10 million. At the time, this seemed like a large sum. They had no plans for monetization, and the platform was growing so rapidly that managing it became increasingly difficult—they viewed the deal as a rescue. However, in the long term, they missed the opportunity to earn colossal amounts, as by 2014 the company's valuation reached $500 million.
In 2014, Ohanian returned to Reddit's board of directors but left in 2020. He acquired some shares during his time on the board, but most of his wealth was earned through other investments. Huffman is now likely the largest individual shareholder of Reddit. In 2015, he was offered to return as CEO to address operational difficulties. Since then, he has accumulated 3.1 million shares (2.3% of the company) through a performance rewards program. The rest of his wealth, according to Forbes, consists of Reddit stock options, $190 million in cash, and other investments. Huffman did not comment on his financial affairs.
While generous compensation packages are common for billionaires like Elon Musk, Huffman has built his share practically from scratch, which is a rare case.
In its 2024 IPO memorandum, Reddit stated that the compensation for Huffman and Chief Operating Officer Jen Wong had been significantly increased, as it no longer matched their roles. Huffman's compensation in 2023 rose to $193.2 million.
Huffman indeed justifies his earnings. When he returned as CEO in 2015, Reddit was in crisis. The platform faced content moderation issues, and toxic users filled some subreddits. After the firing of a popular employee, moderators protested by shutting down their communities, leading to the “Great Reddit Blackout.” Huffman took over management a week after that.
“At that time, Reddit had adhered to the principle of ‘nothing is forbidden’ for ten years,” Huffman recounted in The Best One Yet podcast. “I think it was the platform's founder who could make the right decision. The Reddit team was very scared and afraid of any changes, fearing they would destroy Reddit.”
Huffman began to carefully change the platform's policies: bans on spam, harassment, and incitement to violence were introduced. His team quickly banned a number of subreddits, including those containing child pornography and racist ideas. Reddit also began to quarantine communities with offensive content, requiring users to confirm their consent to view them. This was done to create a more comfortable space and attract advertisers, as Reddit does not place ads in quarantined subreddits.
Huffman and his team decided that advertising would become the primary means of monetizing Reddit, which helped keep the platform free. “He built the company’s advertising business from scratch,” notes Morningstar analyst Malik Ahmed Khan.
However, there was a challenge in helping brands set up targeted advertising while maintaining user anonymity. Unlike Meta and Google, which use demographic data and user behavior to personalize ads, Reddit requires brands to use only contextual cues. For example, if a user is subscribed to a parenting subreddit, they are more likely to see ads for children's products.
This strategy is still working: in the last quarter, advertising brought Reddit $549 million, accounting for 94% of the company's revenue. When Huffman returned to the company, total sales were only $12–15 million.
Nevertheless, Reddit faces new challenges. The company is actively involved in discussions on the ethics of data use for AI training and finding a balance between freedom of speech and content moderation. Additionally, there is the question of the future of text formats in the age of video content.
However, this seems not to bother Huffman much. “No matter what you’re going through right now, someone on Reddit has already been through it and shared their story,” he stated on October 30. “The best advertisement for Reddit is its own content.”
