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.
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.
FWIW you don’t have to live in the USA to participate in the US stock market. Not that I’d recommend doing so in this instance…
Edit: the Reddit Directed Share Program does appear to require USA residency https://www.reddit.com/dsp
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.
They likely just sent it to anyone above a relatively low karma threshold desperate to get any sorry fool to buy their stock.
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.
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.
I deleted the email I got. I rarely if ever delete emails. Let that set in. I hope it had a return receipt!
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.
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?
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.
I haven’t seen that “you broke reddit” message in a while. Maybe they bought more servers?
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.
3d probably shouldn’t be in logo’s except mabye for the apple photos app because coloured glass
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.
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.
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.
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
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
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.
