That's possible, but I feel like if they did understand, they would use that understanding to suck a little less hard. It's not just the bad policies, or the bad implementation, or even the bad timing, it's that they're not even taking PR seriously as part of the process. It would not be difficult or even particularly expensive for them to hire one (1) person who is good at PR, and take their advice. They don't seem to have bothered, which really suggests they don't know it's important.

Yes, they might think investors won't understand why users are upset, and they might be right. But most people seriously considering putting money into a social media platform are at least vaguely aware of the fact that it's not going to make money if the users leave, and they will notice bad PR. The API protests have shown up repeatedly in at least three publications that serious investors follow. If anyone at Reddit was really paying attention to the interpersonal parts of the scenario, it would have occurred to them that some problems are easier to avoid than they are to hide to investors, and interpersonal conflict is one of them.

(Edited to add: "how and when to avoid pissing people off" is taught in business school, I think. Point being, it's possible Huffman thinks investors are too stupid to evaluate his decisions, but I think investors are, on average, likely to understand that Reddit needs some way to hold users other than just "we have lots of content," since people who have careers in business and finance deal with human factors a lot).