If they're losing so much money then why do they have 2000 employees?

Yup. Investors want free value. They want more than they paid, and unprofitable businesses don't tend to offer that.

They need to at least look profitable for the short period of time before the IPO, and insinuate that they'll continue to be after.

Reddit is no outlier in the tendency of every commercial internet platform to progressively get worse. This is a universal trend among the VC-backed platforms and software companies which dominate the economic landscape of Silicon Valley.

It is not enough for a Capitalist firm to sustain itself. It must expand. If it is not expanding, it will not receive financing. Investors want to buy a stock for $5 and sell it for $20. They do not want to buy a stock that will sit at $5 forever,

Instead, that finance will go to a competing firm which is expanding, and that competing firm will eventually buy out the small "friendly, good guy" Capitalist. There is an inevitable tendency towards consolidation and monopoly. This is undeniably apparent in the modern landscape of the Internet, where firms like Facebook, Google, Amazon, Microsoft, Twitter, and Reddit, etc have become synonymous with the Internet itself. It is also dreadfully apparent in the Walmartification of the retail economy and corresponding changes to the manufacturing pipelines of consumer products.

When VC firms invest in these unicorn companies, they are expecting the astronomical growth of one to outweigh all the money they piss down the drain on 99 others. Some companies, like Reddit, grow astronomically. Eventually they hit limits though. There is only so much blood you can squeeze from a stone. But harder and harder they will try, to chase an unsustainable rate of profit.

Eventually, the investors begin to see the writing on the wall. The value of the company has reached a plateau, and it is not reasonable to expect it to climb any higher. That is when the time comes for an IPO. It is the opportunity for all these investors to make one final hype campaign and rally the price, so they can dump their stocks on a bunch of suckers just before the company circles the drain.

The only thing which makes Reddit peculiar is that they have started circling the drain a bit too early for these investors to unload. It is a very poorly managed IPO. But it is driven by the same economic imperatives which drive every company to maximize exploitation as well as the new trend which has developed throughout the financialization of the economy where the sustainability of firms doesn't even matter as long as you know when to collect your chips.