Reddit is one of the biggest social media platforms, with tens of millions of users actively contributing.
They have massive power over many topics, and at any time on any day, tens of thousands of people are seeing the posts published. With this much power, Reddit is valued at a high price since its profitability is thought to be very high.
However, even though Reddit discloses its revenue number, it never discloses the profit figures, leaving people without any idea about its profitability.
That’s why this article will take a look at whether Reddit is profitable or not and the details about this topic.
Is Reddit Profitable As A Company In 2023?
As of the latest published numbers in 2021, Reddit’s revenue was at $350 million annually. However, this is their gross revenue without removing the costs and taxes, so it’s not the profit.
According to a analyst, Reddit is not profitable despite its immense popularity.
The platform is actively seeking ways to become profitable, but this endeavor is facing challenges as it clashes with the expectations of users who are accustomed to Reddit’s previous policies regarding third-party apps and data access
Here is their revenue breakdown since they were founded.
| Year | Annual Revenue |
|---|---|
| 2014 | $8 million |
| 2015 | $15 million |
| 2016 | $25 million |
| 2017 | $50 million |
| 2018 | $80 million |
| 2019 | $120 million |
| 2020 | $170 million |
| 2021 | $350 million |
Since they are not a public company, Reddit does not have to share any kind of financial information with the public.
That’s why they don’t share their profit numbers. However, in an interview the CEO Hoffman gave, he mentioned that Reddit was never profitable.
Reddit’s Valuation
With over 400 million monthly active users, Reddit is by far one of the most active platforms. This reflects on their valuation as they were valued at $10 billion in 2021.
They reached this number quite quickly as they grew their user base. Below is a summary of their valuation.
| Year | Valuation |
| 2014 | $0.5 billion |
| 2017 | $1.8 billion |
| 2019 | $3 billion |
| Feb 2021 | $6 billion |
| August 2021 | $10 billion |
The latest valuation numbers are not yet out, so we don’t know how much Reddit is valued as of 2023, but the website didn’t stop growing.
They are still increasing their user base even though they’ve had some problems with their community recently.
Also Read: Is Twitch Profitable? Does It Really Make Any Profit?
Reddit Business Model – How does Reddit make money?
Reddit is a social media platform in its essence, and social media platforms have a business model just like any other business. This could be a subscription, product selling, advertising, or something else.
In the case of Reddit and many other social media platforms, advertising is the number one business model driver.
Advertising
Reddit’s advertising system launched four years after they were founded, in 2009.
They first allowed companies to put sponsored links on their homepage, but this gradually changed a lot.
Now they have two advertising methods, one for those who spend more than $10,000 quarterly, which is a managed service. The other is for everyone else and is an auction-based system.
That way, Reddit puts extra effort into the most spenders on their platform with a dedicated account management team.
The others bid to put their ads on the website. It allows Reddit to profit the most from everyone else.
Reddit Premium
Another method that Reddit uses to generate income is its premium subscription system.
Their premium subscription costs $6/month, and it offers no advertisement on the platform and access to special communities.
According to the last report by the company, Reddit had about 344,000 premium users at the end of 2021.
How Much Does Reddit Earn Per User (ARPU) In 2023?
It is projected that Reddit will generate an average revenue of $1.02 per user in 2023, which represents a 41.66% increase compared to the previous year. By 2025, an average Reddit user is expected to contribute $2.04, marking a significant 100% growth compared to this year.
Who Now Owns Reddit?
Currently, Reddit is owned by Advance Publications, the same company that acquired major shares of the social media platform in 2017. Reddit was originally created by Steve Huffman and Alexis Ohanian in 2006, and it was sold to Condé Nast Publications, a division of Advance Publications, just one year later. Since then, Advance Publications has been the owner and operator of Reddit, maintaining control over the popular online community.
Conclusion
With over 400 million active monthly users, Reddit has some of the biggest numbers among social media platforms.
It has unique content, and most of its users don’t use other social media platforms, which is different from Facebook or Instagram users.
Despite these numbers, the CEO of Reddit, Hoffman, said that the company was never profitable and the company has never shared its profit numbers so far.
They only share revenue which shows the amount of money the company makes without extracting the expenses.
Reddit made $350 million in 2021 and was valued at $10 billion, which shows an extraordinarily strong outlook.
However, we don’t know if Reddit is actually profitable or not since they don’t disclose this data.
FAQ
Can Reddit make a profit in the future?
Reddit has a massive user base with very little spending on maintenance and employees.
That’s why they should be making a profit, but the CEO said that Reddit was never profitable ever since it was founded. Time will only tell if Reddit will make a profit in the future.
How big is Reddit?
Reddit has more than 400 million active monthly users and about 50 million daily active users.
They are currently worth over $10 billion. This makes them, by far, one of the biggest social media platforms.
Sources
Amit Gupta is an experienced expert in digital marketing and co-founder of DrFranchises. With more than 11 years of knowledge in franchise digital marketing, SEO, email marketing, and social media marketing, Amit has helped many brands achieve incredible success online. As a passionate entrepreneur and owner of 7 franchises, he continues to study franchise models, looking at costs, revenue, and profitability to guide brands toward profitable growth. When he’s not working on digital marketing, Amit enjoys spending time playing with his beloved dog.