this post was submitted on 28 Feb 2024
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Wait. Why is Reddit losing so much money? (www.businessinsider.com)
submitted 9 months ago* (last edited 9 months ago) by [email protected] to c/[email protected]
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Reddit kind of anticipates this critique in its investor docs, and argues that it didn't really start operating as a serious business until 2018 when it finally started "meaningful monetization efforts" — that is, trying to make money for real.

But that's still six years ago. What has Reddit been doing since then?

One big, obvious answer: It has been hiring a lot of engineers and spending a lot of money on their salaries...

...What am I missing? I asked Reddit comms for comment but they declined, citing the company's quiet period before the IPO.

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[–] [email protected] 111 points 9 months ago (2 children)

Shortly after they introduced reddit gold, they made enough money to cover the server costs for decades. A few years later, with continued revenue from this (until they scrapped it last year), all the money was gone.

The reason reddit loses money is because it's poorly managed.

[–] [email protected] 51 points 9 months ago* (last edited 9 months ago)

You say that like it's incompetence.

They're deliberately lining their pockets with exhorbitant executive pay-outs.

[–] [email protected] 44 points 9 months ago (2 children)

Poorly managed as in stolen. The fucking ceo was paid 193 MILLION. For what exactly???

[–] [email protected] 18 points 9 months ago

(Note: There are some dumb stories floating out there about Reddit CEO Steve Huffman getting paid $193 million last year. You can ignore those in general since they are really about stock and options awards with a long vesting period. And you can specifically ignore them for this story since those costs aren't included in the R&D totals.)

From the article. Reddit wants you to believe it had $193m to throw at the CEO, to imply they are great at making money. The more people spread this lie the more reddit wins.

[–] [email protected] 9 points 9 months ago

That’s a deep misunderstanding of how that number came to be. He wasn’t paid 193 millions. He was paid something like 6 millions.

The rest is shares that he got and kept through the whole period. When you setup a company you create a number of shares that founders buy (with most kept on the side for investors). As you grow so do those shares value, and you’re also granted some as bonus/salary/et . At 10B those share are worth 190 millions. If Reddit would be worth 1 billion those shares would be 19 millions.

Basically he owns about 2% of Reddit.

Almost every IPO in history has resulted in a significant drop in value on the first weeks as early investors drop their shares on the market and hype goes down. I would be surprised if Reddit loses half of its value in the first month alone. It is much less bullish than a lot of other recent IPOs.