The key demo of 18 to 34 is mostly uninterested. Of the next demo, you only have one slice of the pie who interacts much at all. Compared to most other social media, it's not worth much.
This, however, is an anecdote of one data point of course.
Edit - Also, why pay to advertise when you can just make a shill account for free?
Because it does not guarantee visibility.
"Why pay for advertising on Facebook when you can have a Facebook page?"
Plus, the users are self segregated, what a dream.
Imagine you wanted to sell drop shipped backpacks. All you'd need to do is create and prime, or buy, a dozen or so accounts, and start recommending your own brand subtly in every recommendation thread in r/backpacks or whatever the most popular sub for it is.
People trust Reddit because they assume they're other real users. Many advertisers already know and take advantage of this. It's nearly impossible at this point to know who or what is authentic.
This view may very much be the answer. Like, if the 18-34 "key demo" (which, incidentally the Millenials you mention are a part of) is "mostly uninterested", it's dumb to chase after them. Reddit had - and surprisingly, still has - its own, large core demographics, which they somehow failed to monetize. Hell, for a good while that demographics was upstream from Facebook, providing content for Facebook users to repost.
I guess the VC rules are that you either shoot for the Moon or get written off, even if you have a perfectly good submarine.
If anything, just by the logic of commodity economics, they should in theory be - at best - borderline profitable. They don't provide any obviously useful or difficult service apart from an easily recognisable domain name and they face global competition. No obvious moat, no obvious profits.
