Comment on Reddit wants to raise $748M with IPO, sets value at $6.4B

DogPeePoo@lemm.ee ⁨6⁩ ⁨months⁩ ago

• JohnEdwa@sopuli.xyz ⁨6⁩ ⁨months⁩ ago

  Because profit requires you to pay taxes. It’s not uncommon at all for growing companies to invest and otherwise use up any profit they generate so the balance sheet stays negative while the company keeps growing in value.
  Also allows you to cry how those dirty 3rd party app developers are stealing all your profit boo hoo.

  When you look at the revenue growth of reddit, it’s not hard to see that if they were able to function at all when they had a revenue 1/10th of what it’s now, they could turn profit if they wanted to.

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  • UnderpantsWeevil@lemmy.world ⁨6⁩ ⁨months⁩ ago

    It’s not uncommon at all for growing companies to invest and otherwise use up any profit they generate so the balance sheet stays negative while the company keeps growing in value.

    That’s absolutely true. But what exactly has Reddit been expanding into? Its not like they’ve got AWS like Amazon or they’re rapidly expanding their infrastructure footprint like NextEra or some novel product like OpenAI.

    As far as I can tell, the company’s biggest primary expense is administrative overhead. Not exactly value-add.

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    • AbidanYre@lemmy.world ⁨6⁩ ⁨months⁩ ago

      Given that CEO pay was like 30% of their expenditures last year, administrative overhead seems like a good guess

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    • JohnEdwa@sopuli.xyz ⁨6⁩ ⁨months⁩ ago

      Not a clue, but they did go from having 230 employees back in 2017 to 400 in 2018, 700 in 2021 to finally over 2000 in 2023.
      So they are doing something.

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      • hypnicjerk@lemmy.world ⁨6⁩ ⁨months⁩ ago

        (super smash bros announcer voice)

        IMMINENT LAYOFFS!

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  • db2@lemmy.world ⁨6⁩ ⁨months⁩ ago

    You mean Steve Huffman has said something that isn’t true? This is totally unprecedented! 🤡🤣

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• Moobythegoldensock@lemm.ee ⁨6⁩ ⁨months⁩ ago

  You don’t have to be profitable to have a desirable stock, but usually there is some promise of future profitability (like Tesla for most of its history.)

  Not sure what reddit has going for it, though.

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  • DogPeePoo@lemm.ee ⁨6⁩ ⁨months⁩ ago

    I think Reddit will be Robinhood 2.0

    It’s a bag pass/exit liquidity

    It’s a ruse

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• GissaMittJobb@lemmy.ml ⁨6⁩ ⁨months⁩ ago

  This has never been necessary for an IPO.

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  • DogPeePoo@lemm.ee ⁨6⁩ ⁨months⁩ ago

    Typically, IPO’s are nothing more than exit liquidity

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    • GissaMittJobb@lemmy.ml ⁨6⁩ ⁨months⁩ ago

      Basically yeah. Cash-out time for the VCs.

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• designated_fridge@lemmy.world ⁨6⁩ ⁨months⁩ ago

  Who cares, we’re leaving an economy where no one cared about profitability. Just growth. It’s all about whether they can capitalize on that growth now.

  Spotify was the same. Turned a profit the first quarter after shifting the focus towards profitability.

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