this post was submitted on 18 Jun 2023
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Do we know they are losing money? Do we even know they are not making money? It is more likely that they are not making enough money to satisfy the stock holders and give big payouts to the principles.
Generally an organuzation does not need to make money to stay in business. They do however need a positive cash flow and assets need to exceed liabilities generally or at least by enough creditors will not force bankrupcy. So profit is entirely optional. However for a typical stockholder company the profit expectations are unlimited.
Well they've said they're "not profitable".
Sure, but companies play very free and loose with the definition of "profitable". Amazon and youtube have both also been said to be unprofitable, but both blatantly make a lot more than they spend. They just do shit like reinvest all profits into expanding the business or paying the board.
And capitalism, as it is now, is set up to demand increasingly more profits each year unto infinity - a flat, steady income for the company and its employees and board members is still seen as a failure. A company can be profitable (as in, made way more money than it spent), and they'll still say it's floundering if it didn't make more profits than the previous year.
Companies are also currently raising prices and claiming they have to because of supply chain problems and inflation, while also making record profits.
And after all that has happened, you'd take what they say at face value? I certainly would not. I take "not profitable" to mean not as profitable as they would like to be to support whatever valuation they are targeting. As far as I know I've not heard that their cash flow is negative. It is negative cash flow that puts companies out of business and is the serious thing.
If I understand correctly they currently don't have investers currently since they made this move as part of their attempts to take the company public, so there's even less of an excuse.
They are a private company, not a public one. That does not mean they do not have investors. They have investors but they are privately held and probably private equity investors. I do not know exactly who or what investor groups own Reddit, but since it is a company it has investors.