Comment Section for Reddit’s planned IPO share price seems high, unless you look at its AI revenue | TechCrunch

The TechCrunch article discusses Reddit's plans for its initial public offering (IPO). Reddit's proposed share price, ranging from $31 to $34, might appear high, but its revenue from artificial intelligence (AI) could justify this valuation. At the top end of the price range, Reddit's valuation could reach approximately $5.4 billion. The company's revenue for 2023 was $804 million, indicating it could trade at a multiple of 6.9x to 8x its revenue, depending on the valuation used. Reddit's AI revenue comes from selling contracts to AI companies for access to its data, which is used for training large language models. Earlier in the year, Reddit sold contracts worth $203 million for data access, with terms ranging from two to three years. The platform's continuous user interaction and data growth make it an excellent resource for AI training. Despite some user concerns about Reddit's collaboration with AI companies, the potential revenue from data sales could be substantial. The article suggests that investing in Reddit could be seen as a side bet on AI itself.