I am very doubtful their model would scale to Reddit's size, and certain they don't have any wish to.
If by some crazy fluke there weren't any highly motivated money-brains in the social media space, I'm absolutely certain a sustainable non-profit open source solution would exist in place of reddit and facebook, and it would eventually accumulate nearly as many users as those sites have. Maybe not as quickly, and maybe while throwing up donations banners at the same rate as Wikipedia, but it would happen. But you need to get impossibly lucky for the entrepreneurs to ignore "the space" when you have 100k users, and by 1 million users the scent of "alpha" has drawn so many of the biggest, meanest, smartest of the bunch that you need to be an absolute juggernaut of momentum and name recognition (like craigslist and Wikipedia) to have any hope of competeing.
"could be free" and "must be free" are such a moving of the goal posts that it is impossible to argue against. I mean, you didn't even go through "should be free" on your way.
Network effects tend to pick extreme winners and losers. From most user's perspectives, there isn't much of a choice. I have an iPhone for a totally stupid reason: My family's chat is an iMessage group and they coordinate photo albums with Apple's shared albums thing. I use reddit for literally no reason at all except that other people use it.
I assert that it would be better for me and most to use an equivalent networking facility maintained by a non-profit entity, and that if there were some kind of cross-site replication such that you really could choose which option to use, a very large number of people would pick the option that didn't present inline or otherwise invasive advertisements, and (indirectly) the option that had free API access, via something like Apollo (software that's simply built better than its competitor on its OS).
So not only do I believe non-profit-reddit (hey, that's "NPR", complete with donation drives) could exist, I believe it would be better for its users and so it should exist. But I also believe it can't really exist as long as somebody is throwing a bunch of (indebted) money into winning the network effects war. So I believe that for-maximum-profit-reddit should not exist.
But I admit the belief feels empty since I'm not authoritarian enough to take it all the way to "reddit must not exist". So I'm just sad instead.
It's not freeloading, it's just a bunch of people dedicating so much time and attention to communicating with each other that the server costs are dwarfed by the value of the platform to its users.