Reddit goes ‘mainstream,’ posts first profitable quarter

Reddit (RDDT) shares climb after the company’s third quarter results beat analyst estimates and showed the company reached profitability. Yahoo Finance Executive Editor Brian Sozzi sits down with Reddit CEO Steve Huffman to discuss the results. “The story with Reddit is pretty simple. Yes, we're very proud of the quarter we just put up, but really at the end of the day, our strategy for the last couple of years has been to make Reddit better, faster, safer, easier to use, and that drives growth. And then growth, in turn, means more reach for advertisers,” Huffman tells Yahoo Finance. The CEO says, “One of the most important things to understand about Reddit is it's a simple platform. Communities and conversations. It's a simple business model … We connect companies with their customers in an environment where they're probably talking about relevant products and decisions.” “What's unique about Reddit, beyond the consumer product, which itself I think is unique, really as the most human place on the internet, but what's unique about the business is that it's very simple with such high gross margins and our ability to grow the business with modest cost growth.” Huffman says that as a platform, Reddit has entered “an era of mainstream” by making the product easier to use. He notes, “One of our focuses next year will be search, which is a nice opportunity because it's one of the few opportunities that can both make the experience for new users better, help them find their home on Reddit more efficiently, but it makes the core experience for core users even better … And then down the road, it's also a monetization opportunity.” Reddit has signed deals with ChatGPT maker OpenAI and Alphabet’s (GOOG, GOOGL) Google to license its content to train artificial intelligence (AI) models. Huffman says, “At the end of the day, what consumers on the internet want, and also what companies training large foundation models want, is Reddit's content.” He explains that Reddit’s willingness to do commercial deals reflects its belief in openness. As AI technology evolves so does the conversation around regulation. Huffman says, “The first thing I would ground that conversation is this technology is incredibly important for humanity, and it will create a tremendous amount of opportunity and eventually wealth for everybody … Then the regulations that we would advocate for are around transparency.” To watch more expert insights and analysis on the latest market action, check out more Market Domination here. This post was written by Naomi Buchanan.