Reddit’s got Readies: “The Front Page of the Internet” Triples in Value
August 19, 2021
2 min read
What's going on here?
Social media platform Reddit has seen its value triple to $10bn after a new financing round which generated an extra $700m for the company.
What does this mean?
Fidelity Investments led the recent round of funding which has seen Reddit’s valuation jump 67% since its last round of funding in February. This means that the company has managed to triple in value within two and a half years. Taking this into account, Reddit will have raised a total of $1.6bn since the company’s inception in 2005.
In a recent blog post, Reddit said “we have been making a great deal of progress on all fronts” and that “we are investing in our products and diversifying the Reddit experience to include new ways for communities to connect”. Reddit has also said that they are “optimistic and encouraged…that our investors support our vision and want to deepen their stakes in our future”.
What's the big picture effect?
There is no doubt that Reddit is making strides in its journey to becoming a profitable social media company. By 2020, Reddit was seeing an average 52m daily active users and was ranked the tenth most popular social media site in the US. Riding on these successes, Reddit has begun to pursue a more global strategy outside the US, opening offices in the UK, Canada and Australia, and hoping to employ another 700 staff this year. This would double the company’s current headcount to 1400 people.
The site has also started to diversify by going beyond what was its traditional “text and picture message boards”. For example, Reddit recently launched Talk, a Clubhouse-esque audio chat room. Moreover, it has put more focus on the site’s video content, especially since its acquisition of TikTok rival, Dubsmash, in December 2020. The company also hired Drew Vollero as its first Chief Financial Officer in March. Mr Vollero is known for helping Snapchat’s parent company Snap go public in 2017. Reddit has done well in growing its platform on an international scale, with much of this down to Reddit’s efforts to discipline its lively and (sometimes) controversial user base, attracting more advertisers to the site. Advertising revenues reached $100m for the first time in the second quarter of 2021, a 192% increase compared to last year.
However, Reddit’s shining light of success dims when compared with its bigger and more established competitors. The company’s $10bn valuation is dwarfed by the likes of Twitter and Facebook which are valued at $52bn and $1tn respectively. Twitter and Facebook also see higher user traffic, with Twitter amassing 260m daily users and Facebook taking the lion’s share of online users, averaging 2 billion daily. Snapchat sees an impressive 293m daily users. Reddit’s recent advertising revenues also pale in comparison to Twitter’s $1.2bn in the same time period. Nonetheless, Reddit’s growth looks promising for the company’s future. With Mr Vollero on board as its CFO, we may see the company soon launching a successful IPO.
Report written by Dan Furniss
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