4 ms·

On the 15th of December 2021 they filed with the SEC in the build up to IPOing, at that time the rumours were they'd be looking for a $15Bn valuation. At that t

On the 15th of December 2021 they filed with the SEC in the build up to IPOing, at that time the rumours were they'd be looking for a $15Bn valuation. At that time, SNAP was worth about 60Bn, TWTR 40Bn (a notoriously shitty stock), Facebook 900Bn. SNAP is down about 60% since then, Meta is down 75%, and TWTR is out of whack because of the acquisition. So basically they missed their chance. They could IPO today, but they'd be selling reddit very cheap, and they'd also be putting it under huge pressure since every other social media company is in the process of doing a huge round of layoffs so reddit would immediately need to start looking at their cost structure. There's a couple reasons why it's so bad. Firstly, everyone's expecting a recession, so advertising budgets are getting cut and that's going to tank Reddit's revenue stream (which is already weak) and secondly, a high interest rate environment means that all that future growth has to be discounted back to a much lower net present value. It's also just in a bad place narratively, none of the small scale social media sites are doing well revenue wise, and Tiktok is eating their lunches anyway.

donedealomg 4y ago
ransom1538 4y ago
I would like to thank you for summary here. This makes it clear.
webdoodle 4y ago
That's not the source of the problem, just a symptom. What caused the financial problems for social media was the censorship, blatant propaganda and use of addiction based behavior modification to subjugate the population; AKA population control. Reddit might actually be one of the worst offenders, but because they aren't public, and have a smaller user base, they went unscrutinized. I highly recommend everyone watch the documovie the Social Dilemma. TLDR; Social media is military grade psychological weaponry aimed at the most vulnerable amongst us.
- adrianN 4y ago
  > Social media is military grade psychological weaponry That would probably be good for the stock value, wouldn't it?
  - webdoodle 4y ago
    Not if your users discover the ruse, and mass quit using social media, or worse start abusing it themselves. Reddit had a large drop off in users after the Black day, however, the latter is in fact is definitely going on as well. The genie is out of the bottle on this one, and social hackers planet wide are now playing the game.
    - adrianN 4y ago
      It's not very potent weaponry if your users discover the ruse...
      - webdoodle 4y ago
        They make every effort too silence people who cut against the grain on this issue: browbeating, gaslighting, censorship, and eventually the ban hammer. Of course, this only slows the fight against these dystopian oligarchs. My hope is that the tipping point will be reached before they have silence too many of us.
geoduck14 4y ago
That is too bad. I've noticed that Reddit has been working on changing its underlying tech stuff and they are likely doing some cool stuff that the public isn't aware of
- Spooky23 4y ago
  The smartest thing they could do is put old.Reddit.com back in front and fire 60% if the people churning away doing whatever.
- yucky 4y ago
  One of Reddit's largest subs (BPT) actually requires the user to submit a picture of their forearm skin color[1] to be granted access to the full sub. If you are the wrong skin color they require a written mea culpa disowning the sins of others who may have had a similar amount of skin pigment as you. And yes, in 2022 this is still the policy. Reddit being a home for racists like this would probably generate a ton of scrutiny if they go public. [1] https://www.nytimes.com/2019/10/08/us/reddit-race-black-people-twitter.html https://www.nytimes.com/2019/10/08/us/reddit-race-black-peop...
  - tcmb 4y ago
    Not sure this is still true... what do you mean by "access to the full sub"? On https://www.reddit.com/r/BlackPeopleTwitter/ https://www.reddit.com/r/BlackPeopleTwitter/ I cannot see any restriction. And the rules in the sidebar state 'BPT is an inclusive space for POC and allies alike.'
    - rngname22 4y ago
      your post or comments will likely be auto-flagged and deleted by a moderation bot if you haven't been verified, that's the standard enforcement mechanism there that subreddits use for more draconian verification/moderation. one of the more painful experiences on reddit is spending 30 minutes writing up a post for a subreddit only to hit submit then get your content immediately deleted by a moderation bot ran by the sub's mods for breaking some rule you didn't realize existed or for having previously posted to some other subreddit that the mods disapprove of, even if you were posting a critical comment or disavowing the beliefs in that other subreddit.
williamsmj 4y ago
"a high interest rate environment means that all that future growth has to be discounted back to a much lower net present value." Could someone explain this to me like I'm a 5 year old (who understands what a discount rate and present value are, but not why that collection of words makes things harder for reddit)?
- brodouevencode 4y ago
  This assumes typical tech operations (borrow until profitable).
  - deleted 4y ago
    [deleted]
- JumpCrisscross 4y ago
  Reddit is unprofitable. They're telling investors: give us a dollar today and we'll give you ten dollars in as many years. (Hopefully.) If interest rates are zero, that's a good deal. If rates are 25%, that $1 will almost get there on its own in a Treasury. A good deal in a low-rate environment is a bad one when rates, the price of money, are high.
  - williamsmj 4y ago
    Picking this one at random to reply to, but this goes to everyone: Thanks for all the replies. I'm still confused. I think of inflation as a thing that devalues a present day $1. But as it applies to companies with revenue it seems like a rising tide that would lift all boats, and something that kind of divides out of the analysis of the future revenue stream of a company. e.g. If Reddit's daily revenue is $x and inflation is 10%, then its daily revenue in a year is (approximately, caveats about their ability to raise prices, etc.) $1.1x. So Reddit can say "give us a dollar today and we'll give you $10 multiplied by ten years of 10% inflation in ten years". Is that mental model wrong? I'm also confused why this problem particularly applies to Reddit, which seemed to the the implication of the comment I originally responded to. Is that just because Reddit makes a loss, and this challenge applies to all such companies?
tinyhouse 4y ago
What do you mean by "a high interest rate environment means that all that future growth has to be discounted back to a much lower net present value"?
- SilverBirch 4y ago
  You can think of the value of a stock being the value of all the future profits. So if I know that a company will make $100m in it's lifetime, I can say that company should be worth $100m. But we have to discount that - because money in the future is generally worth less than money today. If I give you a dollar today, you have a dollar, you put it in the bank and collect interest and next year you'll have $1.02 (2% interest). If I give you a dollar next year, you have a dollar. So the dollar today is clearly more valuable than the dollar next year. So what we have to do is look at when the company will make that money, and discount what that money in the future back to what it's value is now. "This is the net present value of future cash flows"[1]. So as interest rates go up, we apply bigger discounts, so companies whose profits won't come for a long time get heavily penalized by this in their valuation. [1]https://www.investopedia.com/terms/n/npv.asp https://www.investopedia.com/terms/n/npv.asp
  - tinyhouse 4y ago
    Thanks for the explanation.
dehrmann 4y ago
> a high interest rate environment means that all that future growth has to be discounted back to a much lower net present value. But inflation is still higher than interest rates.
- Spooky23 4y ago
  Rates will continue to rise and you can lock in high rates. My college was paid for by 12% US Savings Bonds that my parents bought when I was a small child. That late 70s/early 80s inflation went away in the meantime.

donedealomg 4y ago

ransom1538 4y ago

I would like to thank you for summary here. This makes it clear.

webdoodle 4y ago

That's not the source of the problem, just a symptom. What caused the financial problems for social media was the censorship, blatant propaganda and use of addiction based behavior modification to subjugate the population; AKA population control. Reddit might actually be one of the worst offenders, but because they aren't public, and have a smaller user base, they went unscrutinized. I highly recommend everyone watch the documovie the Social Dilemma. TLDR; Social media is military grade psychological weaponry aimed at the most vulnerable amongst us.

adrianN 4y ago
> Social media is military grade psychological weaponry That would probably be good for the stock value, wouldn't it?
- webdoodle 4y ago
  Not if your users discover the ruse, and mass quit using social media, or worse start abusing it themselves. Reddit had a large drop off in users after the Black day, however, the latter is in fact is definitely going on as well. The genie is out of the bottle on this one, and social hackers planet wide are now playing the game.
  - adrianN 4y ago
    It's not very potent weaponry if your users discover the ruse...
    - webdoodle 4y ago
      They make every effort too silence people who cut against the grain on this issue: browbeating, gaslighting, censorship, and eventually the ban hammer. Of course, this only slows the fight against these dystopian oligarchs. My hope is that the tipping point will be reached before they have silence too many of us.

geoduck14 4y ago

That is too bad. I've noticed that Reddit has been working on changing its underlying tech stuff and they are likely doing some cool stuff that the public isn't aware of

Spooky23 4y ago
The smartest thing they could do is put old.Reddit.com back in front and fire 60% if the people churning away doing whatever.
yucky 4y ago
One of Reddit's largest subs (BPT) actually requires the user to submit a picture of their forearm skin color[1] to be granted access to the full sub. If you are the wrong skin color they require a written mea culpa disowning the sins of others who may have had a similar amount of skin pigment as you. And yes, in 2022 this is still the policy. Reddit being a home for racists like this would probably generate a ton of scrutiny if they go public. [1] https://www.nytimes.com/2019/10/08/us/reddit-race-black-people-twitter.html https://www.nytimes.com/2019/10/08/us/reddit-race-black-peop...
- tcmb 4y ago
  Not sure this is still true... what do you mean by "access to the full sub"? On https://www.reddit.com/r/BlackPeopleTwitter/ https://www.reddit.com/r/BlackPeopleTwitter/ I cannot see any restriction. And the rules in the sidebar state 'BPT is an inclusive space for POC and allies alike.'
  - rngname22 4y ago
    your post or comments will likely be auto-flagged and deleted by a moderation bot if you haven't been verified, that's the standard enforcement mechanism there that subreddits use for more draconian verification/moderation. one of the more painful experiences on reddit is spending 30 minutes writing up a post for a subreddit only to hit submit then get your content immediately deleted by a moderation bot ran by the sub's mods for breaking some rule you didn't realize existed or for having previously posted to some other subreddit that the mods disapprove of, even if you were posting a critical comment or disavowing the beliefs in that other subreddit.

williamsmj 4y ago

"a high interest rate environment means that all that future growth has to be discounted back to a much lower net present value." Could someone explain this to me like I'm a 5 year old (who understands what a discount rate and present value are, but not why that collection of words makes things harder for reddit)?

brodouevencode 4y ago
This assumes typical tech operations (borrow until profitable).
- deleted 4y ago
  [deleted]
JumpCrisscross 4y ago
Reddit is unprofitable. They're telling investors: give us a dollar today and we'll give you ten dollars in as many years. (Hopefully.) If interest rates are zero, that's a good deal. If rates are 25%, that $1 will almost get there on its own in a Treasury. A good deal in a low-rate environment is a bad one when rates, the price of money, are high.
- williamsmj 4y ago
  Picking this one at random to reply to, but this goes to everyone: Thanks for all the replies. I'm still confused. I think of inflation as a thing that devalues a present day $1. But as it applies to companies with revenue it seems like a rising tide that would lift all boats, and something that kind of divides out of the analysis of the future revenue stream of a company. e.g. If Reddit's daily revenue is $x and inflation is 10%, then its daily revenue in a year is (approximately, caveats about their ability to raise prices, etc.) $1.1x. So Reddit can say "give us a dollar today and we'll give you $10 multiplied by ten years of 10% inflation in ten years". Is that mental model wrong? I'm also confused why this problem particularly applies to Reddit, which seemed to the the implication of the comment I originally responded to. Is that just because Reddit makes a loss, and this challenge applies to all such companies?

tinyhouse 4y ago

What do you mean by "a high interest rate environment means that all that future growth has to be discounted back to a much lower net present value"?

SilverBirch 4y ago
You can think of the value of a stock being the value of all the future profits. So if I know that a company will make $100m in it's lifetime, I can say that company should be worth $100m. But we have to discount that - because money in the future is generally worth less than money today. If I give you a dollar today, you have a dollar, you put it in the bank and collect interest and next year you'll have $1.02 (2% interest). If I give you a dollar next year, you have a dollar. So the dollar today is clearly more valuable than the dollar next year. So what we have to do is look at when the company will make that money, and discount what that money in the future back to what it's value is now. "This is the net present value of future cash flows"[1]. So as interest rates go up, we apply bigger discounts, so companies whose profits won't come for a long time get heavily penalized by this in their valuation. [1]https://www.investopedia.com/terms/n/npv.asp https://www.investopedia.com/terms/n/npv.asp
- tinyhouse 4y ago
  Thanks for the explanation.

dehrmann 4y ago

> a high interest rate environment means that all that future growth has to be discounted back to a much lower net present value. But inflation is still higher than interest rates.

Spooky23 4y ago
Rates will continue to rise and you can lock in high rates. My college was paid for by 12% US Savings Bonds that my parents bought when I was a small child. That late 70s/early 80s inflation went away in the meantime.