this post was submitted on 28 Feb 2024
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[–] [email protected] 374 points 5 months ago (7 children)

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.

[–] [email protected] 142 points 5 months ago (2 children)

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.

[–] [email protected] 66 points 5 months ago

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.

[–] [email protected] 5 points 5 months ago

No, that would give them some of the money, but they want all of the money.

[–] [email protected] 119 points 5 months ago (1 children)

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.

[–] [email protected] 83 points 5 months ago (2 children)

People who invest are betting that the problems can be solved by a new team or when the company is sold to Facebook.

[–] [email protected] 71 points 5 months ago (4 children)

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.

[–] [email protected] 39 points 5 months ago (3 children)

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.

[–] [email protected] 14 points 5 months ago (1 children)

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.

[–] [email protected] 5 points 5 months ago

I think I have read this suggestion at Reddit: "Make people who wants to use API as clients pay. " The app doesn't have to have API key, user pays a very reasonable money to access Reddit with their favourite application. Obviously it would come with sane for human browsing limits and AI leechers should pay millions.

Just like a plain old radio station where you can access from web page for free but you need to subscribe for better AAC, high quality streams and standard VLC support.

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[–] [email protected] 20 points 5 months ago

it still exists

[–] [email protected] 18 points 5 months ago

Now that's a name I've not heard in a loooong time.

[–] [email protected] 5 points 5 months ago

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.

[–] [email protected] 35 points 5 months ago (4 children)

One would imagine the chief asshole would reduce his 190m payday by 100m to make the balance beautiful before an IPO.

[–] [email protected] 21 points 5 months ago (1 children)

Nah, he wants the money for his doomsday bunker. I'm sure he considers the $93m for the COO to be fair game, though ...

[–] [email protected] 2 points 5 months ago

Probably thinks $93k for the COO to be fair game, honestly.

[–] [email protected] 11 points 5 months ago (1 children)

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.

[–] [email protected] 3 points 5 months ago

That’s the first time I’ve heard that analogy and I love it

[–] [email protected] 5 points 5 months ago

Why do that when he can golden parachute instead?

[–] [email protected] 2 points 5 months ago

Profitable businesses have to pay taxes

[–] [email protected] 29 points 5 months ago (1 children)

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!^^

[–] [email protected] 80 points 5 months ago* (last edited 5 months ago) (4 children)

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.)

[–] [email protected] 32 points 5 months ago* (last edited 5 months ago)

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!

[–] [email protected] 11 points 5 months ago

Thank you very much for the great explanation, I learned a lot.

[–] [email protected] 9 points 5 months ago (1 children)

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?

[–] [email protected] 5 points 5 months ago

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.

[–] [email protected] 5 points 5 months ago (1 children)

I'm dumb, how is this different from gross profits?

[–] [email protected] 5 points 5 months ago (1 children)

If i'm not mistaken (not an accountant but did do the accounts of a tiny company at one point) Interest, Depreciation and Amortization go into the calculation of gross (i.e. before tax) profits, unlike with EBITDA

[–] [email protected] 5 points 5 months ago* (last edited 5 months ago)

EBITDA is used moreso in internal quarterly and monthly management accounts, which don't follow the exact same structure as an annual report which companies have to publish annually by law and follow GAAP and IFRS guidelinss when preparing.

[–] [email protected] 12 points 5 months ago (2 children)

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.

[–] [email protected] 29 points 5 months ago (1 children)

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.

[–] [email protected] 12 points 5 months ago (1 children)

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.

[–] [email protected] 10 points 5 months ago

I would have totally been one of those IPO investors. I'm seriously considering shorting the shit out of it now.

[–] [email protected] 26 points 5 months ago* (last edited 5 months ago) (2 children)

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...

[–] [email protected] 20 points 5 months ago (1 children)

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.

[–] [email protected] 13 points 5 months ago

And from what I understand they haven't even gotten close to what third party apps had done for mod tools or accessibility.

[–] [email protected] 8 points 5 months ago (1 children)
[–] [email protected] 1 points 5 months ago (1 children)

As much as I dislike their recent choices, a lot of knowledge would be lost if Reddit went down.

[–] [email protected] 9 points 5 months ago (4 children)

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.

[–] [email protected] 12 points 5 months ago (2 children)

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.

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[–] [email protected] 9 points 5 months ago (2 children)

Honest question: what happened to Stack Overflow? I still get answers from it. Have I missed some incident??

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[–] [email protected] 4 points 5 months ago

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.

[–] [email protected] 4 points 5 months ago (1 children)

But what about the poop knife story?

[–] [email protected] 3 points 5 months ago (1 children)

Broken arms, jolly rancher...

[–] [email protected] 3 points 5 months ago

Stupid long horse.

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