In addition to ads they have Reddit Gold (or whatever their membership program is called, it's bad that I've been on the platform for a decade and I have no idea). They made the same mistake Twitter did with Twitter Blue: "Why would I subscribe?". At least Reddit gives you "No ads", Twitter gives you "Less ads". Ok, so no ads but the UI/UX of the official app is trash, it's messy and inconsistent. If they had said "Buy our subscription to keep using 3rd party apps" I would have paid in a heartbeat.
If you want a successful internet ad business you need to do one of those, but preferably both.
That being said, it's wild to me that Twitter never managed to build a DR (i.e. selling clicks/conversions) business, so maybe Reddit is equally as badly managed (which again, is really surprising to me).
These are very bold claims to make, considering that Reddit is at the bottom of every advertiser's priority list, despite being a lot cheaper.
Have you considered that Reddit users simply do not like being advertised to? Asking for a product recommendation on a message board is fundamentally different from seeing an ad for a product on said board.
A google ad that appears when someone searches "car insurance" is very different from an ad in a car insurance subreddit. It's also different from Facebook where you could target based on demographics.