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Reddit has never turned a profit in nearly 20 years, but filed to go public anyway (www.cnn.com)

submitted 6 months ago by L4s@lemmy.world to c/technology@lemmy.world

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Reddit has never turned a profit in nearly 20 years, but filed to go public anyway::Reddit, the message board site known for its chronically online userbase and for originating much internet discourse, filed for its long-anticipated initial public offering on Thursday.

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[–] deweydecibel@lemmy.world 148 points 6 months ago* (last edited 6 months ago) (5 children)

Problem is the entire concept of a site like reddit being "for profit" in the first place.

I know we all wax nostalgic about the old non-centralized Internet with its various small websites and forums, but one thing I do genuinely miss from those days was that those places existed because the people running them wanted them to exist. They had ads or took donations to keep the lights on, but no one was looking to get rich. Passion, not profit.

The decentralized internet was run more by people, the centralized internet is run by board rooms.

That's why I like the idea of the fediverse. That is why this place feels familiar to those early days.

[–] superduperenigma@lemmy.world 41 points 6 months ago (2 children)

I still remember clicking a bunch of irrelevant ads for knives and other weird shit on a forum I visited regularly because the owner said they get slightly more money when ads get clicked on site.

I'm doing my part!

[–] residentmarchant@lemmy.world 21 points 6 months ago

And in the days before tracking cookies, doing that didn't ruin all the ads you'll ever see again

[–] DrRatso@lemmy.ml 18 points 6 months ago* (last edited 6 months ago)

Ads don’t even bother me inherently. It’s part the maximum obnoxiousness of them these days, of course. But most of all, if I do manage to see an ad (like in a mobile app), I get irrationally annoyed at the fact that it is supposed to be tailored to me and yet here I am looking at a 20 second unskippable ad for something I would never in a million years care for.

[–] slimarev92@lemmy.world 17 points 6 months ago

There was a simple version of reddit that could be profitable without compromising what made it enjoyable for the users, but the suits had to go chasing after a bunch of fads (remember bow they tries to produce a series of video AMAs?).

[–] thecrotch@sh.itjust.works 10 points 6 months ago* (last edited 6 months ago) (1 children)

The "old internet" hasn't gone away. It's easier than ever for your average person to set up their own website. Look at all the shit you can do with WordPress, usually for free and usually with minimal technical knowledge or experience. Reddit/Facebook/Google/etc have done nothing at all to prevent people from doing that. The people still choose reddit/Facebook/google. I don't know we're supposed to change that without actually removing people's freedom of choice.

[–] Hate@lemmy.dbzer0.com 8 points 6 months ago* (last edited 6 months ago)

The people still choose reddit/Facebook/google. I don't know we're supposed to change that without actually removing people's freedom of choice.

In my opinion/experience, it's for a few reasons. People are marketed these centralized platforms, typically they're very/fairly simple to use, and those platforms already have an established userbase. Combined with the other factors, the userbase will keep growing, which also incentivizes Even more users to adopt the platform.

For most people, there's no incentive to use some small random forum. And these small random forums aren't typically run for profit, meaning people aren't paying for ads for their niche forum or hobby website because it's just a hobby, not a business run for profit. Whereas people will see countless ads for Instagram or TikTok. Typically, people who don't block ads, and use these sorts of media didn't care enough to bother looking for alternative platforms, they couldn't even be bothered to set up an adblocker.

[–] june@lemmy.world 7 points 6 months ago

I have no qualms with a person making a comfortable living off of building a website like Reddit. None at all. I’d rather have someone who’s able to dedicate their full time and even a team to making an experience great for users and making a very healthy living off of it.

But yea, spez is a greedy fuck and the ELT at Reddit are all greedy fucks. Reddit has no business being a publicly traded company.

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[–] topperharlie@lemmy.world 131 points 6 months ago (4 children)

honestly, it has the word AI somewhere in their last year activities, even if they don't do it themselves.

Investors are dumb as fuck, they know nothing about anything other than keywords and hype trains, so with the AI keyword they might go crazy on this.

I keep saying it, the stock market is a mistake for humanity, it doesn't make sense to put a gambling house in the core of the world economy.

[–] ininewcrow@lemmy.ca 61 points 6 months ago

But it isn't gambling ... It's managed and calculated financing in companies that need the investment in order to grow

I'm kidding, this is sarcasm .. the stock market is a freakin casino with built in cheats and frauds that favor the rich and wealthy.

[–] deweydecibel@lemmy.world 30 points 6 months ago* (last edited 6 months ago)

The stock market, much like capitalism in general, is useful if regulated properly, but the inherent corrosive nature of human greed on any regulatory system will eventually erode those regulations down and let this shit run rampant. There are genuine benefits to it, but they're buried beneath the sheer scale of wealth begetting more wealth at the expense of everyone else.

Part of it is that, to spite it being "gambling", it sure doesn't feel like there's a lot of losing going on with the biggest players. They don't seem to need to be as careful as you or I would need to be. It'd be one thing if it was fair gambling, but it isn't.

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[–] RedEyeFlightControl@lemmy.world 76 points 6 months ago (2 children)

Perhaps if the ceo wasn't making like 200m a year, it would show some profits

[–] Lulzagna@lemmy.world 28 points 6 months ago* (last edited 6 months ago) (1 children)

Not to be that guy, but I think he makes 300k and was given 193m in stock options last year based on some whack evaluation.

Still an utterly insane number, hope they get crushed on the public market

[–] MataVatnik@lemmy.world 20 points 6 months ago (1 children)

He paid himself 193 mil because he knows its not going to be worth more than 1.93 mil after the IPO.

[–] Speculater@lemmy.world 3 points 6 months ago (1 children)

I've spent years watching IPOs, it's going to get pumped and then dump after a few months. Anyone shorting it after the first couple of weeks is going to lose their ass.

[–] MataVatnik@lemmy.world 1 points 6 months ago

I can't wait to see how this plays out

[–] ugjka@lemmy.world 14 points 6 months ago

Hollywood accounting tactics probably aswell

[–] unreasonabro@lemmy.world 55 points 6 months ago (1 children)

but they've cleaned the site up so much! I mean they got rid of all of us, didn't they

[–] IDontHavePantsOn@lemm.ee 12 points 6 months ago (1 children)

Next is that pesky porn problem that makes up most of the traffic.

[–] mightyfoolish@lemmy.world 3 points 6 months ago

Why, Google just paid $60 million a year to scan reddit accounts and generate new dirty videos along with designing adult actors suited to user personal tastes. (What else can you do with reddit user data?)

[–] tsonfeir@lemm.ee 52 points 6 months ago* (last edited 6 months ago) (2 children)

Because the stock market is a scam and whoever is valuing these companies so high is clearly in on it. Any company that has no profit ~~is~~ should be worth nothing in an IPO.

Edit: strikethrough, to be more clearly an opinion.

[–] Windex007@lemmy.world 4 points 6 months ago (1 children)

Any company that has no profit is worth nothing in an IPO.

I envy people with the bravery to speak passionately about something they don't understand at all.

[–] tsonfeir@lemm.ee 3 points 6 months ago

I love that phrase. Edited to express that my statement was an opinion.

[–] ColeSloth@discuss.tchncs.de 3 points 6 months ago (1 children)

How much is it worth for the power to push an agenda onto 850,000,000 people?

[–] tsonfeir@lemm.ee 2 points 6 months ago* (last edited 6 months ago)

Subjective. To whom? That’s the big question. When valuing a company, logically you look at the books. If the books say they cannot survive without continuous investment, they’re not a good financial investment.

You cannot measure the value of Reddit having a lot of users who could, in theory, leave at any moment. It’s not something that can have a value. Therefore it’s made up.

[–] DarkThoughts@fedia.io 22 points 6 months ago (1 children)

Given Spez's salary I'd say they definitely make a buck.

[–] db2@lemmy.world 5 points 6 months ago

He's going to take it all.

[–] jimp@lemm.ee 18 points 6 months ago

Fucking arseholes. It has been my imaginary home since it started and now I have to use fucking mastodon and bluesky fucking dicks.
On the plus side, Lemmy has been getting really good recently

[–] scarabic@lemmy.world 16 points 6 months ago (3 children)

I think people don’t understand just how good Facebook is at ads. Their relevance engine is unlike anything else. If something 1/3 as effective could be done to Reddit, this place would be making billions.

I’ve run ads on Facebook and I’ve run ads on Reddit. Facebook was like a massage with a happy ending, and Resdit was like being shat on by a vagrant.

There’s absolutely no reason Reddit couldn’t be making tons of money with as much as they know about hobbies and interests in general, and the free traffic they are able to draw to such a mountain of niche content.

I hope not to see Reddit go the way of Facebook. But to say it couldn’t make a profit is not true.

[–] CileTheSane@lemmy.ca 5 points 6 months ago

I feel like the average Reddit user is more likely to be running Adblock than the average Facebook user.

[–] Nurgle@lemmy.world 3 points 6 months ago

People talk about Reddit and AI in terms of what Reddit will do for those LLMs. But I imagine another part of it has to be what they’ll do for Reddit. Like redditors volunteer sooo much information that it’s really an advertises dream if you can start to thread it together.

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[–] LiveLM@lemmy.zip 12 points 6 months ago* (last edited 6 months ago)

I hope their IPO comes crashing down in flames.

Didn't think I'd be here hoping for the failure of what used to be my favorite website but here we are.

[–] A_Very_Big_Fan@lemmy.world 10 points 6 months ago* (last edited 6 months ago) (1 children)

I smell a short position in my future after that IPO...

[–] sebinspace@lemmy.world 8 points 6 months ago

Imagine the absolute conflict of interest that is r/WSB

[–] ChunkMcHorkle@lemmy.world 9 points 6 months ago (1 children)

The REAL value of Reddit that tends to get overlooked in these conversations about Reddit's measurable value in the IPO has nothing to do with its use or its users, but (1) in its ability to influence public opinion and (2) its possession of users and data to sell on, including being a platform for ad delivery to millions of eyes.

Now look at its majority owners: Conde Nast, Tencent (China), and Sam Altman (AI). There are some who believe this is coincidence. But I believe where there is money, there is no such thing as coincidence.

Reddit has already proven that it has never made and will never make a profit in and of itself, yet the cash continues to flow. That's because Reddit management is structured around churning Reddit's secondary benefits into wealth for itself, and nothing else.

Look at their actions, both in the short term and in the long term. Regardless of their words, the owners have proven incontrovertibly that neither the users nor even the usability of the site means jack shit to them.

It's ALL about advertising money, being able to steer public discourse, and scraping data wherever they can find it. That's the real product.

Thus it's a pretty certain guarantee, IMO, that anyone who isn't already on the Reddit board or an owner of Reddit will lose whatever they invest in the IPO, because Reddit is NOT about social media, or providing/creating value for its users. Reddit is solely about scraping the secondary benefits that the users provide and selling them off for the benefit of the few.

Even the selling off of pre-IPO shares -- normally reserved for those already involved in the ownership or financing of a company about to go public, because pre-IPO shares can offer massive gains if the IPO is successful -- should tell you that they expect RDDT to instantly sink. Why on earth would they give those sweet pre-IPO shares up to the unwashed masses if they thought there was even a remote chance the IPO would at least break even?

This IPO is complete shit, lol. And what's even funnier is that the C-suite of Reddit is SO used to pulling fast ones over on their users that they aren't even trying to hide it. I feel sorry for anyone buying these shares, because they are going to tank on day one. There's literally no value there, other than for the rich boys already skimming it off the top, and this IPO is their final skim.

[–] butterflyattack@lemmy.world 5 points 6 months ago (1 children)

Why on earth would they give those sweet pre-IPO shares up to the unwashed masses if they thought there was even a remote chance the IPO would at least break even?

I suspect it's because they're worried that their users are going to short them and encourage others to do the same, so they're trying to get them involved and committed. They don't want WSB causing shit. My guess is that the share prices will do pretty well, at least initially. There are plenty of ignorant investors who want to get in on the next big tech stock. Just a guess though, I don't know enough about this stuff to invest in stocks myself.

[–] ChunkMcHorkle@lemmy.world 2 points 6 months ago* (last edited 6 months ago)

To short a stock is kind of difficult to do on an IPO because you have to borrow a stock to short it, and pre-IPO only the underwriters have that stock, and are not usually lending it out. Naked shorting -- where you don't actually have a stock but you sell it anyway, lol -- is illegal. I know there are a lot of folks talking about shorting RDDT here but you have to actually borrow a stock to short it.

More likely is that Reddit's trying to get people to buy at a fixed price before it tanks, because any shares purchased pre-IPO are guaranteed cash at a set rate for them, not subject to the trading volatility that will come with the IPO. I think that's why WSJ is calling Reddit's strategy an "unusual IPO wager."

So far this year it's been a rocky start for IPOs anyway, many are trading below IPO value, even companies that have more in the way of tangible assets than Reddit. But the clock is against them, the Reddit board pretty much has to do it as soon as possible or fight the added market volatility that comes with an election year, among other reasons.

I've linked a couple of articles; the second one especially is very helpful. It talks about a similar situation, a healthcare company called BrightSpring with a heavy debt load looking for capitalization that went for an IPO in January 2024, and how they spent their pre-IPO time trying to talk investors into buying at a set price beforehand because that's how they could still get some cash out of an otherwise shitty IPO showing. Personally, I think this is exactly what Reddit is trying to do, and what this car-dealership style hawking of pre-IPO shares via email is trying to accomplish for the Reddit board.

Archive links:
WSJ: Reddit Plans to Sell Stock to Loyal Users in Unusual IPO Wager
WSJ: Will the IPO Market Spring Back in 2024? The First Big Debut Offers Clues

[–] Artyom@lemm.ee 8 points 6 months ago* (last edited 6 months ago)

Most tech companies aren't profitable when they go public, that's been true as long as the tech industry existed.

[–] nodsocket@lemmy.world 7 points 6 months ago

Who else is going to short?

[–] kylian0087@lemmy.world 7 points 6 months ago (2 children)

Hoe does this work. If a company has not made a profit in 20 years. How is it not bankrupt?

[–] wurosh@lemmy.ml 17 points 6 months ago* (last edited 6 months ago) (1 children)

You keep telling the next investor it'll be profitable soon. I believe the guy that came up with this scheme first went to prison or something, but afterwards we all collectively decided we were cool with it.

[–] whoscheckingin@lemmy.ml 8 points 6 months ago

That's why they need to go public in the first place. Investors are like it's right now or you're shutting down, no more free money for you.

[–] butterflyattack@lemmy.world 3 points 6 months ago

They've had investors who were willing to pay into a loss-making company. Could be that they sold investors on the idea that it will be profitable at some point in the future but it needs to be funded while it grows. Could also be that the value they see in it is not just financial - the ability to influence opinion, harvest data, stuff like that.

[–] Telodzrum@lemmy.world 6 points 6 months ago

Ahh…Tech industry, never change

[–] autotldr@lemmings.world 3 points 6 months ago

This is the best summary I could come up with:

Reddit, the message board site known for its chronically online userbase and for originating much internet discourse, filed for its long-anticipated initial public offering on Thursday.

The filing comes nearly three years after Reddit hired its first chief financial officer, and executives, including co-founder and CEO Steve Huffman, began publicly discussing the possibility of an IPO to further elevate the company’s profile.

Reddit, which has called itself the “front page of the internet,” is a social media veteran: the company started in 2005, the year that college roommates Huffman and Ohanian graduated from the University of Virginia.

In 2021, Reddit caused mass market upheaval when a community of day traders on the platform called WallStreetBets began buying up shares of GameStop in an effort to hurt hedge funds that bet against the stock.

Thursday’s filing offers the most detailed look yet at the state of Reddit’s business, which seeks to grow beyond the traditional ad-supported model upon which most social platforms continue to heavily rely.

And while Reddit said it expects its total addressable market in advertising to grow to $1.4 trillion by 2027, it also acknowledged in the filing’s risk factors disclosure that it has “a history of net losses and we may not be able to achieve or maintain profitability in the future.”

The original article contains 933 words, the summary contains 215 words. Saved 77%. I'm a bot and I'm open source!

[–] jimmydoreisalefty@lemmy.world 2 points 6 months ago (1 children)

Profit

Does it have shell companies that Reddit offloads its profit to...

Might be similar to twitter or news media, influence is worth more to its owners?

Data is valuable as well...

Top 10% own stock, so that can also be part of the stock games...

[–] TurtleJoe@lemmy.world 3 points 6 months ago

Reddit has been a private company for its entire existence. There really isn't a point in it making a profit, as long as the people running it are paying themselves.

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