How Reddit Makes Money

Reddit Inc. (RDDT) is a social media website that enables users to form online communities, share ideas, photos and videos, post the latest trends and breaking news, and vote on content posted by other users. The website is known for its discussion forums, including its popular “Ask Me Anything” format.

Reddit makes money by selling advertising space and from an optional premium membership plan that allows users to turn off ads and enjoy other benefits. Reddit also earns revenue from data licensing and various products in the user economy.

Reddit’s Industry

Reddit is a social media website that provides a network of communities where users canpost news stories, images, videos, and links. A user’s standing within these communities is determined by the content they share and its evaluation by other users, as determined by their upvotes and downvotes.

Reddit also is well known for its online discussion forums on politics, entertainment, and other topics such as r/cryptocurrency, r/politics, and r/wallstreetbets. Reddit faces a long list of competitors, including Meta Platforms Inc. (META, formerly Facebook Inc.), X Corp. (formerly Twitter, Inc.), and Google parent Alphabet Inc. (GOOGL). Some lesser-known competitors include Digg, Tumblr, Quora, 9GAG, and Gizmodo Media Group.

Reddit’s Financials

Reddit earned $1.3 billion of revenue in 2024, according to the company’s annual report filed on Feb. 13, 2025. That’s an increase of more than 60% from the $804 million Reddit earned in 2023, when it was still a private company. However, the company’s net losses also increased, from $90 million in 2023 to $484 million in 2024.

Reddit had over 101 million daily active users in the last three months of 2024, an increase of 39% from the same period a year earlier. 48 million of them were in the United States, and nearly 54 million in the rest of the world.

History and Leadership

The San Francisco, California-based company was founded in 2005 by Steve Huffman and Alexis Ohanian. The two were college roommates and founded the company soon after graduating from the University of Virginia. Reddit was acquired by Condé Nast Publications in 2006 and was subsequently spun off into an independent company in 2011.

Huffman is Reddit’s current CEO and serves as one of the company’s board members. Ohanian stepped down as a board member in June 2020, and asked that he be replaced by a Black candidate. Reddit subsequently named Y Combinator CEO Michael Seibel as Ohanian’s replacement.

Recent Developments

Reddit launched an initial public offering on March 21, 2024. The initial share price was $34, setting a total value for the company at $750 billion. Reddit shares jumped after the company launched and steadily grew over the following months, eventually reaching $225 per share in early 2025.

Prices have receded since then, falling to a price of around $100 per share in April 2025. Although significantly reduced, that still gives the company a market cap of $18 billion.

The Bottom Line

Since its founding in 2005, Reddit has grown to reach millions of active users, bringing in revenue from ad sales as well as premium memberships and other initiatives. As a social media company, it doesn’t have the reach of competitors like Facebook or X, but it’s still one of the top 10 most-visited websites in the world.