Believe it or not, Reddit or more than its flagship thread WallStreetBets. Despite the fact that its original coding remains intact, the social media platform has soared to hosting 52 million daily users, according to the fourth quarter of 2020. While those numbers are much lower than top-tier competitors like Twitter and Snapchat, Reddit is growing quickly. With new funding in tow, the site boasts a $10 billion valuation and executives are still eyeing an IPO.
What's the update on Reddit's upcoming IPO? How could the latest funding round change the game for a company that has grown more than 300 percent in value over the last 2.5 years?
Fidelity Investments injected $700 million into Reddit in the latest funding round.
Wall Street's Fidelity Investments and other institutional investors went all in on the home of WallStreetBets. Fidelity led a $700 million investment in the company's latest funding round, which means Reddit now has a much higher corporate valuation than it did during the last funding round in February.
Overall, this brings Reddit's total funding to $1.6 billion. According to Reddit staff, "We have been making a great deal of progress on all fronts — from hiring our first chief financial officer and building out a comprehensive finance function, to expanding internationally in the UK, Canada, Australia, and more countries to come."
New funding increases Reddit's valuation by 67 percent
With $700 million to toy with, Reddit now has a valuation in excess of $10 billion. That's 67 percent higher than the company's pre-money valuation, and it says a lot about the platform's state of growth.
When it comes time for the IPO, just imagine how much that valuation will swell.
A Reddit IPO still on the horizon, no timeline set
Much like a tortoise, Reddit seems to be preparing itself for an IPO slowly and steadily. Reddit CEO Steve Huffman told reporters that the company still has a public offering on its mind, but a firm timeline hasn't been set for the proceedings.
Perhaps Reddit's first order of business will be to allocate that $700 million in funding for growth, expansion, and those hefty SEC fees.
Will Reddit be able to tread water with the big guns of social media?
Other publicly traded social media companies have much higher usership numbers. These platforms also have income statements that push Reddit into a lower league. While Reddit's quarterly ad revenue hit $100 million, Twitter secured $1.2 billion in ad revenue during the same time period.
Still, Reddit's quick growth could close the gap. The site has increased ad revenue by 192 percent YoY, which could mean the platform is catching up with its most intimidating competitors.
Perhaps a bit more growth over a few fiscal quarters could position Reddit more competitively in the public market. However, being part of a different capitalization category could also be beneficial for future Reddit stock. It could intrigue investors seeking a new diversification strategy to take on a young security like Reddit.