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Reddit faces serious misinformation scrutiny now that it’s a public company

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After its initial public offering on Thursday, March 21, Reddit is now under increased scrutiny to address misinformation on its platform. Analysts are advising the social media company to improve its content moderation to comply with the heightened regulatory standards of being a public entity.

Julian Klymochko, CEO of Accelerate Financial Technologies, expressed concerns that Reddit’s current reliance on volunteer moderation might not be sustainable with the additional regulatory oversight it faces.

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“It’s like relying on unpaid labor when the company has nearly a billion dollars in revenue,” Klymochko said.

With Reddit’s revenue reaching $804 million in 2023, Klymochko believes the company must significantly invest in trust and safety initiatives, which could lead to a sharp increase in expenses.

Despite its nearly two-decade history, Reddit has encountered various challenges, including changes in leadership and dissatisfaction among its users. Although the company boasts 73 million active users, it has yet to achieve profitability, with losses increasing to $717 million from $467 million in 2021, the year it initially considered an IPO.

Nonetheless, Reddit’s shares jumped 48% in their New York Stock Exchange debut, a notable performance despite the company’s longstanding lack of profit.

Experts anticipate that Reddit will increase its expenditure on enhancing safety and trust measures, essential for maintaining advertiser relationships and removing inappropriate content.

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[LAUREN TAYLOR]

AFTER ITS IPO ON THURSDAY, REDDIT FACES HEIGHTENED SCRUTINY TO COMBAT MISINFORMATION on its platform. EXPERTS RECOMMEND THAT THE social media company ENHANCE ITS CONTENT MODERATION TO MEET THE STRICTER REGULATORY EXPECTATIONS THAT COME WITH BEING A PUBLIC COMPANY. 

THE CEO OF ACCELERATE FINANCIAL TECHNOLOGIES, ARGUES THAT REDDIT’S RELIANCE ON VOLUNTEER MODERATION WON’T HOLD UP UNDER THE INCREASED REGULATORY ATTENTION IT’S NOW FACING.

JULIAN KLYMOCHKO

CEO | ACCELERATE FINANCIAL TECHNOLOGIES

“It’s like relying on unpaid labor when the company has nearly a billion dollars in revenue.”

WITH REDDIT’S REVENUE HITTING $804 MILLION IN 2023, KLYMOCHKO BELIEVES THE PLATFORM MUST INVEST HEAVILY IN TRUST AND SAFETY MEASURES, POTENTIALLY CAUSING A SIGNIFICANT SURGE IN EXPENSES.

REDDIT, WITH NEARLY TWO DECADES UNDER ITS BELT, HAS FACED TOUGH TIMES — CHANGES IN LEADERSHIP, AND MOMENTS WHEN ITS USERS WEREN’T HAPPY. EVEN WITH 73 MILLION ACTIVE USERS,, IT HASN’T TURNED A PROFIT —LOSING $717 MILLION—A SIGNIFICANT INCREASE FROM $467 MILLION IN LOSSES IN 2021, THE YEAR IT INITIALLY CONSIDERED AN IPO. 

HOWEVER, DESPITE NOT HAVING MADE A PROFIT SINCE ITS LAUNCH, REDDIT’S SHARES SOARED IN THEIR NYSE DEBUT.