Social news site Reddit has seen its valuation take a hit since its last funding round in August 2021.

Fidelity, the lead investor in the round, has cut its stake’s estimated worth in the social media platform by 41.1%, from $28.2 million to $16.6 million, TechCrunch reported, citing disclosures the firm has made in its annual and semi-annual reports.

The devaluation of startups across the world is part of a growing trend and brings into question whether Reddit will maintain its plan to go public at a valuation of around $15 billion.

Reddit has already raised over $1 billion and has Sequoia Capital and Andreessen Horowitz among its backers.

The downward valuation trend highlights the impact of declining global economic conditions on fledgling startups, although numerous larger startups have managed to maintain their value.

Reddit to Charge for Access to its API as Valuation Drops

Popular AI models including ChatGPT and GPT-4 have used publicly available data from sources like Wikipedia, Reddit, and Stack Overflow to train these LLMs so they can learn what they need to answer almost any query coming from a user.

In a bid to exploit this opportunity, Reddit has announced that it will begin charging for access to its API, following in the footsteps of Elon Musk’s Twitter.

The platform plans to offer free access to developers creating apps and bots and to researchers looking to study the site for strictly academic or non-commercial purposes.

However, companies crawling Reddit for data and not returning any value to users will have to pay.

The company is asking developers to pay $12,000 for every 50 million requests, according to a post from the creator of a popular third-party app called Apollo.

“Apollo made 7 billion requests last month, which would put it at about 1.7 million dollars per month, or 20 million US dollars per year,” the developer said in a Reddit post about the change.

Reddit Ad Revenue Rises, But Still A Far Cry From Meta and Other Rivals

In 2021, ads and premium user subscriptions brought Reddit $456.38 million in revenue, up from $189.09 million in the previous year.

However, that figure is still a far cry from Meta‘s $113 billion and Twitter’s nearly $7 billion.

Reddit is home to over 430 million monthly active users, with more than 1.2 million special interest communities and 138,000 active communities.

However, the platform’s value per user is the lowest among other social networks including Facebook, Snap, Twitter, and Pinterest, with an average revenue per user (ARPU) of about $0.30.

In comparison, Twitter and Facebook have an ARPU of about $9.48 and $30-$40, respectively.

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