Reddit IPO Potential 'Watershed' Moment For Tech Industry, Says Wedbush's Dan Ives: Expects It To Hit $1B In Revenue Next Year

Wedbush's Dan Ives thinks that the upcoming Reddit Inc. IPO has the potential to be a "watershed" moment for the tech industry.

What Happened: Ives said the Reddit IPO is primarily about the engagement on the platform and its potential for advertising as well as the data it generates to train AI and large language models.

"This is a company that's going to do billion [dollar] revenues in the next year," Ives said during an interaction on CNBC.

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The question, according to Ives, is can Reddit turn into an AI story from an LLM?

"If you look at it from the investor perspective, what is the appetite for Reddit, this is a potential watershed moment, broader for tech."

Reddit, which is a social media platform that is centered around creating category-specific communities, derives its value from being the internet's discussion board based on topics, news, events and more.

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In its nearly two decades of existence, Reddit has seen billions of comments made on its platform, but many of them might not be useful enough to train a large language model without some specific fine-tuning.

"This is a company that's going to do a billion in revenues into the next year," says @divestech on @Reddit ahead of its Wall Street debut. "This is a potential watershed moment… for tech." $RDDT pic.twitter.com/nerlmlISNc

— Last Call (@LastCallCNBC) March 21, 2024

"This AI revolution is not just on the enterprise, it's not just about ‘Godfather of AI' Jensen of Nvidia, you're starting to see it's spread. That's why it's such an important week, showing the appetite is there in the market."

Why It Matters: Ives thinks the value of data a few years ago is "not what it is today," which makes the Reddit IPO interesting enough since data monetization opportunities are better now than before.

Reddit landed a $60 million deal with Alphabet Inc.'s GOOG GOOGL Google in the run-up to its IPO.

The company is reportedly guiding that its IPO could be priced at the top range of $31 to $34 per share, or even higher. At the top range, it plans to raise up to $519 million, with 15 million shares on offer to the public.

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Photo courtesy: Shutterstock

Editor’s Note: This story has been updated to reflect the number of shares offered for subscription to the public, along with the amount estimated to be raised.