Looking at company incorporation papers, Forbes's George Anders estimates that the front page of the Internet, and all its seedy glory, is worth at least $240 million dollars. Where does he get that figure? Well, he looks at what its corporate owner, Advance Publications, the same company that owns The New Yorker, Vogue, and Vanity Fair, think it's worth.
Advance has recapitalized Reddit, taking the site out of its Conde Nast division and allowing Reddit employees to own a sizable minority of newly issued stock. As part of that recapitalization Advance bought $20 million of convertible preferred stock in Reddit and put in provisions saying that if Reddit is ever sold for less than $240 million, the conversion terms will be rejiggered so that Advance comes away with a bigger slice of Reddit and employees get less.
Those calculations imply that Reddit is already on track to be worth at least $240 million.
Advance, which bought Reddit in 2006 for an undisclosed amount that is thought to be $5 million or less, spun the company off as a standalone operation about a year ago. Those figures above are from filings related to that move. Considering About.com, a site with less cache but more unique visitors, was scooped up by IAC's Barry Diller for $300 million in August, that figure fits. However, not even Anders is too sure about that number.
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None of this is confirmed and there are other ways to calculate the value of the company, which Anders does. He also gives us the market value per user, "a method often used by venture capitalists and stock pickers," which brings in the most optimistic number. Reddit gets 43 million unique visitors a month, he says. We're not sure where he got that number, but we found a 34 million unique visitor number from a January 2012 Reddit blog post. Off of his number, however, Angers calculates: "Google is currently priced at about $220 per search user. Facebook is more like $50. Yelp is at $17, Pinterest $30. Reddit counts 43 million unique users a month. On that basis, a Yelp-like valuation would put Reddit at more than $700 million." Let's say we were using the 34 million person number, that would still put it up around $578 million.
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Then again, there is actual revenue at Google, and not so much at Reddit, according to Anders. He calls the current revenue "skimpy" and notes that it has so far not turned a profit. Looking around it's hard to find hard numbers to confirm these assertions. But all signs point to low revenue and possibly no profits. In 2010 (after the Advance buyout) the company asked users for money because "Reddit’s revenue isn’t great," read a note on the site. Like all Internet websites, it relies on ads to make money, many of which come from small businesses and the "occasional big brand such as Autodesk," writes Anders. For now, advertisers like the social network because of its big addicted audience. But that is a precarious way to make money. Look what happened to Digg. Other than that, the site also has a program called Reddit Gold, which offers extended features for $3.99/month. We couldn't find any profit figures. Based on all of that, Anders calculates a lowly value of $50 million.
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We're not sure what to believe besides the fact that Reddit could be worth anywhere for $50 million to $700 million dollars. Considering the state of social media companies these days, that range doesn't sound far off.