The "American Tieba" Reddit, which has a hot IPO, has Tencent and Ultraman as major shareholders

On Thursday, "American subreddit" Reddit made its debut on the NYSE, soaring as much as 70% intraday and ultimately closing up 48%.

As Reddit's stock price soared, major shareholders behind it such as TENCENT and OpenAI's CEO Sam Altman emerged.

How much money did they make from investing in Reddit?

TENCENT's Total Investment Return Rate Reaches 22% Over Five Years

Since 2019, TENCENT's total investment in Reddit has reached $417 million. On Reddit's first day of listing on Thursday, the value of these shares increased to $509 million, resulting in TENCENT achieving a total investment return rate of 22% over five years.

Although TENCENT has made profits from this investment, its returns appear relatively modest compared to the S&P 500 index during the same period.

Reddit's COO Jen Wong stated in 2018 that Reddit aims to become a truly commercial company. By 2019, Reddit finally began to demonstrate real commercial value, achieving revenue of over $1 billion for the first time.

TENCENT's investment in Reddit began in 2019, when Reddit's popularity in the gaming sector and its large user base attracted TENCENT's attention. In 2019, TENCENT executives James Mitchell and Dan Brody invested approximately $250 million in Reddit, valuing Reddit at $3 billion at that time.

Reddit's co-founder and CEO Steve Huffman said in a media interview: "The reason for this deal is simple, TENCENT is an investor in many video game companies, and video games happen to be a very popular area on Reddit."

Sam Altman Makes a Net Profit of $200 Million on Thursday

After Reddit closed up 48% on Thursday, OpenAI's CEO Sam Altman saw his stake on this social media platform surge by $200 million, with a total value exceeding $613 million. However, he cannot cash out immediately now, as there is a six-month "lock-up period" after Reddit's listing.

According to the prospectus, Sam Altman controls 7.6% of Reddit's outstanding shares after the company's initial public offering Looking back in history, before becoming the CEO of OpenAI, Altman was the president of Y Combinator, an organization that helps startup companies grow (he left in 2019), and has invested in many well-known tech companies such as Airbnb, Uber, Instacart, covering various fields including accommodation sharing, transportation services, online grocery shopping, payment processing, and project management tools.

In 2014, Altman invested around $27 million in Reddit, leading to a valuation of $500 million for Reddit. Even though Reddit was not profitable at the time, Altman believed that Reddit was undervalued. In a blog post, he wrote:

"I may have been one of the first dozen people to use this site, I visited Reddit every day for 9 years, I can't imagine how many hours I spent there. Reddit, initially seen as a simple pastime tool, has evolved into a deep and valuable social media platform."

Altman had a deep emotional attachment and confidence in Reddit. He was not only an investor but also a member of Reddit's board of directors until early 2022.

In 2021, during a prosperous period in the tech industry, Altman once again invested $60 million in Reddit. Specifically, he invested $50 million at a price of $42.47 per share, and an additional $10 million at a price of $61.79 per share.

However, in the following two years, the US IPO market experienced a downturn, with a capital winter approaching, and the valuations of listed companies generally lower than the valuations during the private financing in 2021. For example, although Reddit's IPO reached a valuation of up to $6.5 billion, it was still lower than the peak valuation of $10 billion in 2021. Therefore, despite Reddit's 48% increase in share price on Thursday, closing at $50.44, so far, this investment has not brought much profit to Altman.

Nevertheless, his early investment in Reddit in 2014 has multiplied many times, bringing him substantial returns, providing him with more economic freedom and security when facing the uncertain profitability prospects of OpenAI and the "palace struggle" event at the end of last year.

Altman once said: "I receive enough compensation to pay for health insurance, I don't have any shares in OpenAI. I'm not doing this job to make money, I do it because I love it." Documents show that his total compensation in 2022 was around $73,500. Furthermore, at the end of last year, Altman was briefly dismissed by the OpenAI board but was quickly rehired.

In this uncertain situation, his successful investment in Reddit provides him with a certain sense of economic security