- Reddit, which suffered losses, is now worth about $8.15 billion.
- The profitable New York Times is worth about $7.2 billion.
- Investors like Reddit’s business model, which relies on free content from users.
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Pop quiz!
Which media company is worth more than $800 million in revenue and $90 million in losses last year?
Or the company that brought in $2.4 billion and made $232 million in profits?
Putting down the pencil: For now, the winners are money losers. That would be Reddit, the message board that went public last week and currently has a market capitalization of $8.15 billion.
On the other hand, the media company that is actually making money is the New York Times. As I type this, it’s worth $7.2 billion.
The obvious caveat here is that Reddit’s stock price is subject to all kinds of price movements. Last Thursday, when the company went public, Stock prices soared nearly 50%; it fell 9% on Friday. It rose again on Monday, rising 17%. It will take some time for the market to reach a consensus on Reddit’s true value.
And this isn’t the first time some dimwits have compared the value of the Times to technology-driven startups competing for readers’ time and advertisers’ money. Back in 2009, I pointed out content farms. Demand Media was reportedly worth at least $1.5 billion when the Times was valued at $1.3 billion..
It turns out that the Times could see its future At that time I was very doubtfuleventually flourished. Demand whose business model has collapsed due to Google’s algorithm change,went opposite direction.
But if you run a media business, you’ll understand exactly why investors are more excited about Reddit than the Times. The Times spends a lot of money creating the content that readers and advertisers pay for. Reddit gets everything for free from its users.
This is reflected in the financial position of both companies when comparing revenue costs. Last year, the Times spent $1.25 billion, or 51% of its total revenue, on producing and distributing all the content available through its website, apps and media. Print version. By the end of last year, Reddit’s cost of revenue was just 12%, but most of that was money it paid others to host its site and app.
And while the Times has done a great job of changing its business model, It now relies on paying readers rather than fickle advertisers., has diversified beyond news to new products such as recipes and games. You always have to spend more to make more.
But Reddit’s pitch is that there will always be a flow of free content, and that ad sales will only get better. And that’s the pitch investors want to hear right now.