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.
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.
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