I work in financial reporting, so I have a decent idea of what makes up things like operating profit/loss and Adjusted EBITDA.
This does not look good for Reddit and if the company only managed a $90.8m loss after jacking up API costs, nuking virtually every third-party client, backstabbing every power mod, giving alternatives like Lemmy and Kbin an actual user base and selling off user data to Google, then I fully expect things to get a lot worse on the site.
Seeing a report like that, that they did all these things to raise funds and are still not profitable, is there any reason why anyone would invest? Surely the price can only go down from initial offering, right? Unless the price started very low.
People who invest are betting that the problems can be solved by a new team or when the company is sold to Facebook.
Imagine thinking that about a company that isn’t even doing remotely as well as Lycos.
That’s right, it still exists and unlike reddit it’s profitable.
I’d imagine reddit could be profitable too if they stopped throwing money at stupid shit like NFTs and avatars. Selling API access for AI training was a good move in terms of bringing in income since it basically costs them nothing, and they could have totally pulled that off without pissing off half their userbase.
They could’ve also called reasonable prices for api access for 3rd party apps and would have a nice revenue stream now instead of the pr shitshow they got.
it still exists
Lycos isn’t even a particularly bad search engine. It’s just been overshadowed by bigger players like Google, Bing, Baidu, DDG, Yandex, etc. I imagine that their low traffic helps to lower their operating costs a lot.
Now that’s a name I’ve not heard in a loooong time.
I don’t know how in the hell they let it go as wrong as they did. They had all the eyeballs of the internet. They had all the Google search traffic. They had an API that encouraged tons of other people to make applications that link with them to display their content.
All they had to do was light touch monetization, and slightly stroke the egos of the mods. Every new phone, car, light bulb that ever came out had a place where it could be directed right at the people they want to sell it to. All they had to do was disguise it as an unboxing or a slightly pithy review. Hell, they could have gotten competitors to bid against each other. Chevy could have been on there dissing forward, Ford could have been on their dissing Dodge. They’re so many opportunities there for monetization. They have control over their own algorithm.
You’re totally forgetting the part where from the very top down that company is run by total fuckwads.
They’ve fucked up at every single step and remained utterly self righteous throughout.
No, that would give them some of the money, but they want all of the money.
I don’t work in financial reporting, and I have no clue what even EBITDA is…
But even me, I come to the same conclusion!^^
Earnings before interest, taxation, deprecation and amortisation. Interest is classed as other income and taxation is kinda self-explanatory.
Depreciation is spreading the cost of a fixed asset over the course of its useful life. So let’s say you spend $40,000 on a machine that you expect to keep for 20 years, and scrap for $1,000 at the end of its expected life. You depreciate it on the straight-line basis (meaning it goes down by a fixed amount each financial year, or depreciate it by $1,950 each year. Straight-line isn’t the only form of depreciation. Cars for example go down on a reducing balance basis, meaning their value goes down by a lot more during the early years of their lifespan.
Amortisation is like depreciation, but for long term loans and intangible assets (things like customer lists, patents, etc.)
I’ve been in dozens of quarterly review calls for every company I’ve worked for where I EBIDTA is mentioned and this is the first time someone explained it clearly.
Thanks!
Thank you very much for the great explanation, I learned a lot.
I’m dumb, how is this different from gross profits?
I made a comment below about which of my old accounts were receiving the buy-shares offer. I don’t know if what they’re doing raises any speculation to someone with your background, but I’d be interested in hearing if it does.
Vonage did something similar where they let users get in on the IPO. Then got sued in a class action lawsuit because the stock tanked.
https://web.archive.org/web/20121104141751/http://news.cnet.com/2100-1036_3-6079765.html
Reading through that article you could probably find/replace with Reddit.
The complaint alleges that Vonage’s officers decided to offer shares to customers because they knew institutional investors who normally buy IPOs would be reluctant to buy Vonage stock. Vonage has consistently lost money and has never been profitable.
Oh, ouch! If this is similar, it’s a bit ironic that they’ve pissed off the people who would’ve been most likely to invest in the IPO.
I would have totally been one of those IPO investors. I’m seriously considering shorting the shit out of it now.
Their R&D costs seem alarmingly high, when the most ‘innovative’ things we’ve seen come out of Reddit in recent years have been canned features like their own cryptocurrency and RPAN.
Other than that and Spez being paid a buttload in stock options…
I’d be really interested to see their R&D costs for 2022. I’m wondering how much of 2023’s R&D was spurred by restricting the API code, and then allowing certain applications access; having to finally take seriously their decade-old promise to develop mod tools with no planning or preparation; their total surprise at having to provide access to disabled people; and having to update their app. Those are all areas where they were extremely happy to let languish, and which they suddenly had to provide expedited support for after the protests.
And from what I understand they haven’t even gotten close to what third party apps had done for mod tools or accessibility.
One would imagine the chief asshole would reduce his 190m payday by 100m to make the balance beautiful before an IPO.
Nah, he wants the money for his doomsday bunker. I’m sure he considers the $93m for the COO to be fair game, though …
Why do that when he can golden parachute instead?
He doesn’t care about the ipo, or reddit, its employees, its “partners”, or anyone who uses the site. He wants money now, and like a house fly he’s not capable of learning.
Profitable businesses have to pay taxes
Good.
As much as I dislike their recent choices, a lot of knowledge would be lost if Reddit went down.
This is not the first time a platform goes bad and knowledge is lost. People used to think stack overflow was impossible to replace. Now we don’t even use it anymore, most of us.
It will be fine.
What? Stack overflow is still very relevant. I don’t even know what bubble you’re in if you think it isn’t.
Honestly confused by your comment.
Stackoverflow is still very much impossible to replace. The amount of knowledge that it contains is simply too great to fall easily. And LLMs like ChatGPT aren’t even close to being as helpful as SO answers, specially on archaic libraries.
But what about the poop knife story?
Broken arms, jolly rancher…
Stupid long horse.
Honest question: what happened to Stack Overflow? I still get answers from it. Have I missed some incident??
I mostly use chat gpt now, but I guess stack overflow is still there if you don’t use chat gpt. And it can be helpful for finding error messages from apps and figuring out what they mean.
Ohh, I see! Thanks for replying. I often forget about ChatGPT as an alternative
There are 54 pages of risk factors, which, after reading many S-1 filings over the years, seems pretty long. One of the most notable is the sentence, “We have incurred substantial losses during our history and may never achieve profitability.”
Well that doesn’t sound very promising for them.
may never achieve profitability.
I’m not an expert or anything, but that doesn’t sound like a very good investment.
You could short it…
Because spez insists on chasing the newest tech shiny - but only after it’s peaked - NFTs, crypto, RPAN, etc. And although it may yet turn around for him and for reddit, notice that he only jumped onto the AI boom three months after last spring’s series of AI announcements, showing that he’s once again way behind the times.
Edit: one thing has always struck me since his interview last summer. spez said something like “reddit will continue to be profit-driven until the profits arrive”. Like the arrival of profits was inevitable. Like he didn’t need to do anything except wait. Just be patient and the profits will arrive in their own time, not like things have to be envisioned and planned and put in place to get profits, just … they’ll arrive. Some day.
It seems a remarkably lackadaisical attitude for a CEO to have.
Didn’t spez also say that Reddit was a side project that just got out of hand?
Being a tech nerd does not mean you have what it takes to lead a company to profitability.
spez said something like “reddit will continue to be profit-driven until the profits arrive”. Like the arrival of profits was inevitable. Like he didn’t need to do anything except wait.
“It’s easy to sit there and say you’d like to have more money. And I guess that’s what I like about it. It’s easy… Just sitting there, rocking back and forth, wanting that money.” Deep Thoughts with Jack Handey, Saturday Night Live
Probably doesn’t help that Reddit has spent years cultivating some of the most advertiser unfriendly content available (out of the top 100 visited sites). I doubt anyone’s chomping at the bit to advertise on pages like r/jailbait, r/piracy, and r/fatpeoplehate. Even if the worst of the worst have been banned the overall “culture” can’t be erased as quickly
Rpan was pretty cool. Saw a lot of talented musicians and cute cats.
This does not stop companies being successful in IPOs and giving share holders lucrative gains. Take Atlassian as an example of a company seen as successful but is not profitable.
Atlassian has not yet posted a full-year profit in its 20+ years
What does that mean? Who pays the shortfalls?
I am not a CFO but I believe essentially by eating into cash reserves and accumulating debt. Also there is some wizardry when you work out operating profit / EBIT.
Someone more financially competent may want to offer a more accurate answer.
Lots of losses but still paid spez a cool $193 million.
For being a complete douche.
Iirc it was $600k as actual payroll, the rest in private stock. But still, fuck the greedy little pig boy.
That 192M in private stock gonna be 192K soon
Research and development, at $438.3 million
What in the fuck has Reddit developed in the last year that cost half a billion fucking dollars?
The executive payroll
Hey, it’s not easy to make a shitty new redesign of a site. That stuff costs money.
Remember when they killed API access claiming it cost the 10s of millions each year? Turns out they could have just not spent so much on reddit avatars and we’d all still be there today.
They could have just paid the CEO a little less to cover it too. It was just greed so they could sell the data at a pittance, even though the cat is already out of the bag.
An ugly new logo, continued development on world’s shittiest mobile app, and a terrible brand new UI for the website (not to be confused with the previous terrible new UI)
Oh yeah, they also did some NFT bullshit, almost forgot about that one.
they’re selling the ability to harvest data, not provide a platform for anything particularly useful… they are developing data harvesting tools, including for AI…
I haven’t seen that “you broke reddit” message in a while. Maybe they bought more servers?
Because I haven’t been back since the API Debacle…
FTFY
The two options to fix that are either buy more servers or make enough idiotic decisions to drive your user base away that traffic is no longer an issue anymore.
I wonder which one reddit opted for?
Monetization and adware.
Those stupid fkn icons or smth
Maybe they’re bankrolling theDonald’s NYC fines.
They were giving reddit gold to everyone
They gotta sell access to AI companies somehow.
Ego?
Let‘s see, almost 200 million to their CEO, almost 100 million to their COO. They also got a new logo!
Jokes aside I‘m as floored as you.
Whole thing is sketchy AF. I hope very few of its selected users falls for the scam invitation to buy early shares. They’re not only exploiting them for free content and free moderation, they want them to help pay for Spez’s ludicrous compensation.
So, three of my old accounts apparently qualified for the buy-shares offer. Two of them were over the 200k karma threshold to get the offer. Interestingly, the third account had only 191k karma and got the message a day or two later.
Even more interestingly, yesterday a fourth account that I haven’t posted to in over a decade received the offer, and this one only had 50k karma. Admittedly, several accounts were mods, but they were mods of extremely small, very inactive subs, and I had de-modded myself after deleting my data. They also sent an email to the my registered email address for the fourth account (but I don’t know if that’s relevant because none of my other accounts had emails registered).
I’m not sure what’s going on. Did they get so little response from the early offers that they’re going to the accounts of former mods or lowering the karma requirements? I know a couple of my accounts ended up connected by IP information; did they try to contact my old fourth account by PM and email because it was somehow connected to the higher-level accounts, or because they’re getting desperate? Maybe they’re just trying to get lots of numbers to show that redditors are eager to participate, to gin up an ignorant public’s enthusiasm prior to the IPO?
I have to think that, at some level, they’re getting desperate, because it seems so much effort to go to, to dig up an account that hasn’t posted in a decade and then send PMs and emails to it.
I have 56k of comment karma and only 792 post karma (no K there,only 792) but I got an email as well. Technically I guess I’m a mod because I started a sub with another guy but it never saw anything beyond the greetings post. However my account is over 13 years old so maybe that counts for something?
And yeah, I have no intention of wasting my money. They might see a slight profit initially as some might view this as the “new shiny”, but then I fully expect it to tank the moment the investors get a look at their records and start jumping ship.
My reddit account has just shy of 100k comment karma and less than 2k link karma, and I still got the message.
I marked it as spam for “unsolicited messaging” lmao
Oh, lmao!
When it comes to the inevitable Renaissance and guillotines, I just hope spez is close to the front of the line.
This post will probably get automoderated to suicidesville. It’s sensitive to the fally blade decapitator thingy.
I receiced one of those special offer emails to buy stocks on Monday. Weren’t those supposed to go only to power users? I haven’t done anything with my account since the API debacle and wasn’t a power user before.
I feel like their rug pull before the ipo doesn’t work that good. I hope the gme bros will short reddit to the ground, that would be the best end to Reddit I can imagine. Fuck spez.
I got it on an email address linked to an account that was banned in 2020.
I deleted the email I got. I rarely if ever delete emails. Let that set in. I hope it had a return receipt!
I reported it as harassment lol
I was a semi-power user before leaving (13k link karma, 134k comments) and also received the IPO offer per email and per notification. I reported the notification as spam :)
It’s so obvious that they want to squeeze some money out before everything goes down the drain.
They are going out in stages based on # of mod actions or karma. I think the lowest Karma threshold in the final batch was 25k. Which seems like a lot, but isn’t really, at least for the users they alienated in the API debacle.
This is just for the sign-up for information, though. Once they get the whole list they will start going down the list of sign-ups from the top, and start asking for money. Because this isn’t a free share offering, it’s a chance to buy at the IPO price. So even out of the list of Redditors who signed up, a bunch will pass, because if they had a few extra $10k sitting around, they would put anywhere else except Reddit.
And I don’t think they have broken out how many shares are part of this program. (To be fair I haven’t looked that closely). I predict that no matter how many people sign up, they will reject 90% just for the optics. They are only doing this for the free publicity, and rhe fact that they think Redditors will have emotional attachment to the shares for being let into the “club”. So they will only give out enough for the press to write stories about it.
I got one, too, which is hilarious because not only was I not a “power user,” but I torched all of my comments and posts with Redacted 7 months ago and have not touched the site since. I even avoid it when it comes up in Google results for something I’m looking into.
But they still sent me one of these stupid IPO emails.
I mean, obviously there is no human oversight or thought process behind these whatsoever. We all knew that. Probably anyone who has an existing account and a positive karma score got one, and I’m not even sure the threshold is that high.
But I guess we’re all here doing their work for them anyway, because here we are talking about – even if it is to ridicule – and generating “buzz.” I’m sure that’s what they want, somehow.
I got it as well. My accounts were banned… and then all the sudden an IPO comes along and the are unsuspended… i went back in and redacted my accounts that got the email.
Your comment made me go back and check, and I definitely got unbanned at some point. I was site-banned for mass edit>deleting my comments on all my accounts during the API evacuation. One sub saw me doing it, and banned that first account. Whatever, no big loss cuz I’m scorching things on my way out the door anyways. When I did the same with the second account, both accounts were banned site-wide for ban evasion, (because that second account also had comments on that same sub.) And that same pattern happened with every account I had.
But now they’re all unbanned. I wonder if Reddit went back and unbanned old accounts, to try and boost their user numbers prior to the IPO.
Yes, also to fluff up the dataset for the AI sale.
Please don’t forget to fill in the form anyway, with fake data. This will let them believe there are more interested users than reality
I did not get one and my account has a shit ton of karma. But the bio says that Reddit can go down in flames and to go to Lemmy, so that’s probably why.
I redacted every message into something shit-talking reddit and got the email, so that can’t be it.
I guess they just don’t like me. 🤷
Someone redo this, but as an ad trying to get people to short reddit to the ground: https://www.youtube.com/watch?v=ImgMfJ2Lt2E
Here is an alternative Piped link(s):
https://www.piped.video/watch?v=ImgMfJ2Lt2E
Piped is a privacy-respecting open-source alternative frontend to YouTube.
I’m open-source; check me out at GitHub.
Don’t worry, the IPO will not stop the losses. It will just provide a pool for more bonus payments for the management.
Why don’t company’s pay their CEOs in exposure and sense of pride? If it’s good enough for moderators and artists it should be good for CEOs.
Rest in pieces. Federated pieces.
Anyone else here concerned about what this means for the health of the ecosystem? If reddit was never sustainable and we are well and truly past a phase of consolidation there is potentially a lot of history / info to loose here. The damage has been done already by the funding model. While the return to federation and private hosting is nice, there is a potential “dark” age.
Can’t help but feel like we’re getting there already with most sites having the exact same problem. I think Facebook might be the only site that actually makes money due to always prioritising money, everyone else has dominated the market by operating at a loss for the past 2 decades and now suddenly oops we decided we need money.
I’m having fun watching it burn.
I am curious. If you were a Chief officer or VP or something. What kind of changes would you do to make it profitable? Reduce server count? Roll back old.reddit? Just cut overhead? Get rid of Spez? How can they possibly make it profitable given where they are now?
Here’s what I’d do:
-
VIP posts which you have to subscribe to a user to view. Reddit takes a cut of the subscription fee. With the sheer amount of OnlyFans models who astroturf the fuck out of the NSFW subs, it feels beyond stupid that Spez isn’t cutting out the middle man and competing with the likes of OF, Fansly, Patreon and Subscribestar.
-
Add more incentives to subscribe to Reddit Premium, i.e. enhanced search functionality, the ability to time travel back to the frontpage from a previous date.
-
Improve the official Reddit app to the point where it’s on-par with previous third party offerings.
-
Bring back RPAN as a fully-fledged livestreaming platform with fewer restrictions. Introduce ads (Premium users get ad-free viewing) and revenue sharing for partnered creators.
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Change content and moderator guidelines to curb power users.
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Pivot towards short-form video content as a separate section of the site to compete with the likes of TikTok.
You are now hired as the post-IPO CEO
-
Cut my salary to only a silly amount like $200k/year.
Create paid accounts for like $5/year
Allow people to purchase annoyances/chaos like force non-members to use light mode only for a day.
Include bill-through services to grab a cut of any apps making money off the site.
If reddit allowed third party apps again that would probably be enough to get me back. Maybe in another 5 years it won’t but right now Lemmy only wins cause the reddit app experience is bad enough to drive me away.
Yeah, turned out I was actually more loyal to the app I was using than I was to the platform. Though I was also pretty good to the platform, I contributed and interacted daily and often spent money buying gold. I tend to take the attitude that if I’m getting a lot of use out of something I don’t mind spending a little to support it. That’s all in the past now and I wonder how many other paying users they burned.
The premise of the question is flawed in my opinion. It only needs to be profitable because they put themselves in that situation by going public.
A social platform run by users should only need to break even. I have no idea why a web forum needs to be on the stock market.
Now it’s another example of Enshittification of the internet.
And not follow the quest for unending profit no matter the consequences? That sounds like some socialism shit /s
It needs to become profitable because it was unprofitable for 20 years. Would you dump millions into something that doesn’t even have the chance to make you money in the first place? Reddit wouldn’t even exist anymore.
That’s why I said given where they are now, how would it even be possible. What can they do outside of raise prices of reddit stickers or ad-free reddit.
Yeah that’s fair.
Merchandising is the only palatable idea I can think of.
More likely to happen:
-
Twitter’s verified user subscription strategy
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More ad posts with paid-priority (priority hidden from users)
-
Layoffs with AI as miracle cure
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Selling user data for AI training (check)
-
Paid API access (check)
But it’s really hard to ignore that its function isn’t really designed for profit and it’s wacky that we have to humor the idea.
-
There has never been a profitable social media company.
Facebook might have started out as a social media company, but it’s only profitable now because it’s part of an advertising duopoly that has almost all online ads completely locked up. Their actual business is renting eyeballs to advertisers. The social media part of it is just data collection for their advertising.
Reddit can’t compete with the big 2 as an ad platform. They don’t have the reach of the other two, and never will. So, it’s not going to be a good money making platform, but it might be able to have a niche and cover its costs. There are ways it could do that and not be awful for users.
They could partner with Hollywood studios to promote shows and movies, provide forums to discuss them that are safe for those brands. They could work with local governments to be a place to release important information. Governments used to do that on Twitter, but Twitter has gone to shit. This isn’t stuff that will send Reddit shares to the moon like their VC backers want. But, it could survive.
Instead, they’re going to follow the Elon Musk playbook and it will die.
AMA used to be a pretty big draw for lots of people who didn’t regularly use the site and often made international news, but they fucked that right up.
Yeah. You could see they were coordinating with the agents of celebrities. The celebs found it more interesting than the generic interviews they did with other media outlets. Upvoting and downvoting meant the best questions bubbled up to the top, although sometimes they were things the celebs didn’t want to talk about. But, with a good PR person in the room they did fine with it.
There’s a niche there, but it isn’t going to be a humongous one that will make Reddit a trillion dollar business.
Yep. Everyone thinks they are entitled to be Zuckerberg. Only one entitled person got away with it and he even stole the damned thing.
And, he only got away with it until he was able to pivot to advertising. Sure, small social media companies (even relatively large ones like Twitter) also want to sell ads, but the more user data you have, the more you can convince people that your ads are nearly mind control. Meta can do that because they control Facebook, Instagram, WhatsApp, etc. They got all the users because the users were hooked before they started selling the ads, and now network effects mean they don’t want to leave.
All of that sucks in user data which they can then sell ads against. Reddit would just be one text-based ad site where people use pseudonyms. It’s never going to be able to compete with Meta for ad dollars.
In 2023, the company’s revenue was $804.0 million. Research and development, at $438.3 million, was more than half, an awfully big number for a company of this age.
What the heck are they doing‽
Coke. Lots and lots of coke.
Ich bin ein kbinner?
Nein, du binnest ein binner
No matter what happens the CEO and his peers will get fat bonuses
