By Tom Gerken & Mariko OiBBC News2 hours agoImage supply, Getty ImagesReddit has priced its shares on the high of a marketed vary, valuing the social media platform at $6.4bn (£5bn).It has raised $748m because it sells 22 million shares for $34 every, making it one of many greatest preliminary public choices (IPO) by a social media agency.The shares will begin buying and selling on the New York inventory alternate on Thursday.In an uncommon transfer the corporate supplied among the shares to the platform’s customers, though it has not been disclosed what number of took up the provide.Reddit was based virtually 20 years in the past and has change into one of the vital in style web sites on the earth.It’s a web based discussion board the place customers can talk about matters that curiosity them. As of the tip of December 2023 it had greater than 73 million customers, in line with the corporate.However the submitting brings to the forefront a query that has been effervescent for years behind the scenes – how can a enterprise earn a living from what’s, primarily, random conversations.Folks don’t pay to make use of Reddit – the web site is totally free for individuals to browse, publish and remark.For 20 years it could not flip a revenue, and a few may ask why Reddit is value billions if it has not ever made cash.It has tried a number of issues, and a big visible change in 2017 made the web site extra pleasant to advertisers.Nevertheless it appears Reddit’s street to profitability has an finish in sight, constructed round AI fashions.That’s as a result of firms like OpenAI, the developer of ChatGPT, can pay for information of these random conversations.Google is believed to have paid Reddit $60m for the correct to scan virtually twenty years of discussions to make its AI extra human-like – and Reddit has stated it has agreed licensing offers value greater than $200m over the following two to a few years.In February, Reddit stated it misplaced $90.8m in 2023, so the cash from synthetic intelligence (AI) corporations may make the platform worthwhile.Inquiries and accusationsBut there are additionally loads of issues on Reddit’s horizon too.For one factor, the social media platform is dealing with elevated scrutiny from regulators. The US Federal Commerce Fee (FTC) is already trying into how Reddit licences its information for AI fashions – typically talking, regulators do not prefer it when massive know-how corporations promote information generated by customers.Whereas the platform might have seen that coming, it could have been blindsided by a problem from cell phone agency Nokia, which is accusing it of infringing on its patents. “We are going to consider their claims,” Reddit stated, including that it is confronted related accusations prior to now.Maybe most vital of all is that Reddit’s submitting with the US monetary markets regulator, the Securities and Change Fee (SEC), notes its customers as a possible danger that comes with proudly owning shares within the firm.”If we fail to extend or retain our consumer base or if consumer engagement declines, our enterprise… and prospects will likely be harmed,” it stated within the submitting.”If Redditors don’t proceed to contribute content material or their contributions aren’t priceless or interesting to different Redditors, we might expertise a decline within the variety of Redditors accessing our services and products… which may outcome within the lack of advertisers.”Reddit’s consumer base has been identified to react with frustration to modifications made on the platform.Such is their distaste for modifications made in recent times, a search on the platform for chief government Steve Huffman – username u/spez – reveals that when Redditors point out him the feedback are often preceded by foul language.And though there have been efforts to create another platform, one in all Reddit’s greatest pluses is one thing it doesn’t have – a big rival.Whereas there could also be issues from Redditors, the social media platform appears to be on comparatively protected floor when it ties its inventory market worth to its customers, as long as there’s nowhere else for them to go.