After a new round of funding, Reddit has doubled its valuation to roughly $6 billion, WSJ reports.
Why It Matters: The social media has seen its user-count rise through the Covid-19 pandemic and recently gained more attention for its role in the WallStreetBets trading frenzy. With valuations high right now, Reddit CEO Steve Huffman said “it’s a good market to fundraise.” And he’s right. Upstart audio-chat social media company Clubhouse was valued at $1 billion after securing $100 million in a new round last month.
- Reddit’s WallStreetBets community gained notoriety last month after successfully upheaving heavily shorted stocks on the market like GameStop. The incident brought the platform millions of new users as well as new advertising partners.
Numbers To Consider:
- Reddit pulled in $250 million in a late-stage funding round.
- It was previously valued at $3 billion in Feb. 2019.
- Reddit has 52 million daily average users as of October, up 44% from the same month a year prior.
- By comparison, Facebook said it had around 1.85 billion daily users in the December quarter while Twitter announced it averaged 187 million daily users in the three months ending in September. Snapchat ended the December quarter with 265 million daily active users.
A Changing Strategy: Reddit plans to invest the news funds in areas such as “video, advertising and consumer products, as well as to expand into international markets.”
- Last year, the company bought video-sharing app Dubsmash to grab a bigger piece of the user-created video market.
- Reddit is also planning to double its employee-count to roughly 1,400, with Huffman saying part of their raise was to help attract talent.
I’ve been a long-time Reddit user, since about 2013. Before 2020, it seemed like it was going the way of Facebook, where its user base and traffic was getting stagnant and that text-based forums were losing favor to algorithm-based video content.
But clearly the pandemic has provided strong winds behind Reddit’s sails again, something I believe we’re seeing in networks like Twitter and Snapchat too. I wonder how much the pandemic and quarantine has boosted social media across the board. Furthermore, I wonder how permanent this growth is, or if it wanes after vaccines are widely distributed. Only time will tell.