This is not true. A major shareholder would definitely have a cash cow company keep producing a steady 5% dividend return plus stock growth over a one-off 30% gain followed by slow death, as they cannot liquidate their position at the peak price anyway. (This was not the case with reddit, but just to illustrate an ideal situation).

It's a failure of the board of the company to allow the CEO to make a quick buck while trashing the future, and can lead to law suits.

The real problem is that the CEO might just have been incompetent enough to think reddit can get away with anything.

On a side note, I stopped commenting on reddit when they got rid of 3rd party apps and stopped lurking after they forced log in. Lemmy has been a decent alternative, but could still use more users.