Reddit's IPO plans are beginning to crystallize, thanks to a fresh S-1 filing that surfaced Monday morning, setting an initial price range for its stock at $31 to $34 per share.

If investors agree to pay its high-end range, its valuation should hit around $5.4 billion. At the low end of this range, $31 billion, though Reddit would be worth $4.93 billion based on an expected 158.98 million shares outstanding. Others have calculated a potential valuation of closer to, or over, the $6 billion mark by including options held by employees or others.

In any event, everyone seems to assume it will come out at or above the $5 billion mark, which amounts to some sort of a Mendoza Line for Reddit, given the clues its secondary-market trading activity showed on pricing prior to its IPO filing.

With revenue of $804.0 million in 2023, Reddit is set to trade at a multiple of 6.9x to 8x of its revenue, depending on what valuation estimate you use. And this multiple could be even bigger if investors agree to go higher than the $34-per-share range after its roadshow with them.

Given that Reddit is an unprofitable, long-in-the-tooth social media company, and one that relies on advertising, that feels a tad rich. Unprofitable Snap, for example, currently trades at 4.34x revenues while highly profitable Meta trades at 9.86x its own trailing revenues, reports Yahoo Finance.

Reddit's game plan for AI is one good reason why it's pricing shares closer to Meta than Snap.

Reddit sold $203 million worth of contracts to AI companies for access to its data earlier this year. According to the filing:

We are also in the early stages of monetizing our emerging opportunity in data licensing by allowing third parties to access, search, and analyze data on our platform. In the year ending January 2024, we executed various data licensing agreements with a collective contract value of $203.0 million and with terms between two to three years. A minimum of $66.4 million in revenue is expected to be recognized throughout that year ending December 31, 2024, and the rest thereafter. Reddit data is constantly growing and regenerating since users continually come and interact with their communities and each other. We believe our growing platform data will be an important input in training of leading large language models ("LLMs") and also serve as an additional monetization channel for Reddit.

While this did not disclose the buyer in such a contract, OpenAI CEO Sam Altman has an 8.7% stake in Reddit, thereby being the third-largest shareholder. He was also once a member of the company's board of directors.

That's because Reddit is a treasure trove of exactly the kind of training data that always-hungry, large language model AI companies need-from its long history to its huge user footprint and active, crowd-sourced creation of written material. And Reddit has already proven that it can rip revenues out of AI companies in exchange for access to this trove.

Indeed, some Redditors are fretting about the AI and the company in tandem, but perhaps these concerns will not carry so much weight compared to the potential revenue unlock for Reddit from its data.

Investors may also view Reddit as a side bet on AI itself, even if the company's core business is not building AI models. And Reddit is generating fresh data by the hour. That bodes well for the future of Reddit. As the adage goes: If you want to get rich during a gold rush, be the guy selling picks and shovels.