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.
Now that’s a name I’ve not heard in a loooong time.
it still exists
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.
How much do you imagine it costs to make an NFT?
Not the NFTs themselves so much, but the code development to integrate it with reddit for example.
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.
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.)
Thank you very much for the great explanation, I learned a lot.
Sorry, I don’t work in economics so I don’t follow this (but it looks like a great analysis for someone who doesn’t understand it!).
Do all these things mean Reddit IPO is likely to tank (though one never knows)?
I’d like Spez to pay for all he’s done to 3rd party apps and driving mods (and us users) away, but in the end I’m afraid it’s only going to be regular employees to feel the pinch and Spez just cashing out…
Also, Reddit has a ton of users and some other article these days said they’re going to sell everything to AI services that are going to train themselves on Reddit for a lot of dollars. Would this be enough to keep them afloat?
some other article these days said they’re going to sell everything to AI services that are going to train themselves on Reddit for a lot of dollars. Would this be enough to keep them afloat?
That’s an interesting question. It was some deal with Google, to help train Google’s AI. Honestly, Google probably grabbed much of what they needed for their AI while the APIs were still open, but I can still see things Google should want from reddit. First off, just on the “helping with AI” front, they’d be interested in ongoing data for Google’s AI; more importantly, some kind of exclusivity to limit the amount of data other AI companies can get from reddit.
Other data they’d want: given the noticable-even-to-muggles decline in search results during the APIcalypse, I’m certain that Google wants continued access to reddit’s data for their search engine (and again, some manner of limiting other companies access to that data).
As a final, admittedly paranoid thought: I’m sure Google would love access to reddit’s non-public data: the IP addresses of various accounts could be used to flesh out consumer profiles, comments you made could narrow down your actual identity, upvotes and downvotes reveal your opinions, what you clicked through to reveals things of interest, etc. Yeah, they probably have a bunch of that already, but this would strengthen and increase the quality of the data that they have.
But I don’t see Google really making a huge investment into reddit, either. Reddit is too toxic for a corporate giant, and their corporate cultures are almost literally polar opposites. They’ll buy the data, but they’re not going to fairy-godmother reddit, or give it anything except the minimum number of dollars to get the data that they want.
I’ve been in dozens of quarterly review calls for every company I’ve worked for where EBIDTA is mentioned and this is the first time someone explained it clearly.
Thanks!
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.
One would imagine the chief asshole would reduce his 190m payday by 100m to make the balance beautiful before an IPO.
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.
Nah, he wants the money for his doomsday bunker. I’m sure he considers the $93m for the COO to be fair game, though …
The solution is clearly more NFTs. People really love those.
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?
Make mods actually pay for the privilege of modding.
The corporations and political groups that employ them would pick up the tab.
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.
Lots of losses but still paid spez a cool $193 million.
For being a complete douche.
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 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.
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.
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
