It's burning the barn down. Sure, new subs will happen, but they will be harder to find, and they need to re-establish the rules. It also makes monetization hard. All those ads sold against specific subs are worthless. And now reddit doesn't know what subs it can sell ads against. Basically they can only sell ads generally to the entire site. This hits Reddit in the wallet. Also, it mucks up selling the data to AI companies.

Long term, I think you are correct. But short term reddit is trying to IPO. This whole protest will devalue any IPO and cause investors to think twice.