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.
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.
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.
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 …
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.
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.)
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?
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.
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.
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.
You know the very credible sounding theory that Musk bought Twitter to drown it. He used Middle Eastern funds etc. and those people owning these gigantic funds had nightmares because Twitter made it so easy to organise mass unrest. I want to believe this crazy sounding theory since other option would be someone having such a capital, know how and influence is that dumb.
What if this is just a plot to kill Reddit? While crypto bros polluted it a lot, it was very similar with Twitter. Freedom of speech, diversity. It may have bugged people.
