Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Does OpenAI CEO Sam Altman Own Half A Billion Dollars Worth Of Reddit Stock? Not Quite, Reveals Fine Print Of IPO Filing

Published 01/03/2024, 04:51
Updated 01/03/2024, 06:10
© Reuters.  Does OpenAI CEO Sam Altman Own Half A Billion Dollars Worth Of Reddit Stock? Not Quite, Reveals Fine Print Of IPO Filing

Benzinga - by Ananya Gairola, Benzinga Staff Writer.

Over the past few days, several media publications have reported about ChatGPT-parent, OpenAI CEO Sam Altman’s Reddit stock ownership. However, contrary to the widely reported $435 million, Altman’s actual stake is significantly lower.

What Happened: Reddit’s recent IPO filing disclosed that entities linked to the OpenAI CEO possess 8.7% of the company's outstanding shares, including 789,456 Class A shares and 11.4 million Class B shares. However, the association of the shares with Altman does not imply ownership by him, reported Business Insider.

According to the document, “Altman disclaims beneficial ownership of these shares except to the extent of his respective pecuniary interest therein.”

“This is a legal distinction indicating that while he has control over the voting and dispositive control over these shares, he does not necessarily have a direct economic interest in them, except to the extent that he may benefit financially,” said Chris Harvey, a venture capital fund attorney at Harvey Esquire APC.

The footnote in the document suggests that the shares are divided among five different entities: Apollo Projects SPV-B, Altman Holdco, Apollo Projects, Apollo Projects SPV-A, and Hydrazine Capital II.

Other than Altman Holdco, which is an LLC, all the other organizations need to submit disclosure forms called Form ADVs. As per these forms, Altman doesn’t own most of the shares in these organizations.

Instead, he’s labeled as a “related person,” basically someone who gives investment advice. The OpenAI CEO might own up to 5% of the shares in Hydrazine and up to 15% of the shares in Apollo. The rest of the shares probably belong to other investors, but their identities aren't known.

3rd party Ad. Not an offer or recommendation by See disclosure here or remove ads .

This means Altman doesn’t actually own as many shares as people thought he did. For instance, Hydrazine Capital II seems to own nearly 9.9 million shares of Reddit. But Altman probably owns only up to 5% of Hydrazine Capital II’s shares, which is about 492,720 shares of Reddit.

Based on that logic, the report estimated Altman’s Reddit stock outside of Altman Holdco to be worth around $25 million, based on a $5 billion target IPO valuation. If he is the sole owner of Altman Holdco’s 965,128 shares, that would add another $34.5 million.

This brings his total Reddit equity to approximately $60 million, a far cry from the reported $435 million.

Check out more of Benzinga's Consumer Tech coverage by following this link.

Read Next: Sam Altman Brushes Off $7 Trillion AI Chip Project Speculation: ‘Don’t Pay Too Much Attention To That’

Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

Image made via photos on Shutterstock

© 2024 Benzinga does not provide investment advice. All rights reserved.

Read the original article on Benzinga

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.