Reddit’s value jumps to $10bn after new fundraising
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Reddit, the online discussion forum whose users roiled US stock markets earlier this year, is experiencing its own valuation spike with a new financing round putting its worth at $10bn.
The financing, led by Fidelity Investments, lifts Reddit’s valuation by 67 per cent since its last round in February. The deal, which will provide the social media company with up to $700m in new funding, means it has more than tripled in value within two-and-a-half years.
When complete, the financing will mean Reddit has raised a total of $1.6bn to date, according to data from PitchBook, which tracks private companies.
“We are optimistic and encouraged that not only are we resourced and capitalised to continue on our growth path, but also that our investors support our vision and want to deepen their stakes in our future,” Reddit said in a blog post announcing the round.
Reddit has hundreds of millions of monthly users, from the “meme stock” traders who congregate on its r/WallStreetBets message board to fans of cute photos who flock to r/aww. More than 52m people visited its site and apps every day during the fourth quarter of 2020 to chat about gaming, music, news and cryptocurrency across tens of thousands of active “subreddits”.
Recent efforts to tame its unruly user base have also helped to attract advertisers, after many years of taking a more hands-off approach to content moderation than other social media platforms.
But Reddit’s ability to generate income from those users has long lagged behind its social-media peers.
Sixteen-year-old Reddit said that its advertising revenues reached $100m for the first time in the second quarter of 2021, a year-on-year rise of 192 per cent. Twitter, which was founded a year after Reddit, generated sales of $1.2bn from 206m daily users in the same period.
That has not deterred Reddit from taking steps towards an initial public offering. In March, it hired its first chief financial officer, Drew Vollero, who previously helped Snapchat’s parent Snap go public in 2017.
Steve Huffman, Reddit’s chief executive, told the New York Times that he had no “firm timeline” for an IPO.
Meanwhile, Reddit has been expanding outside the US, opening offices in the UK, Canada and Australia, as it plans to double its headcount this year.
It has also been expanding beyond its traditional text and photo-based messageboards into new formats, such as Talk, a Clubhouse-style audio chatroom, and video, with December’s acquisition of Dubsmash, a TikTok rival.