Reddit triples value to $10bn

Bengaluru — Reddit will raise up to $700m in a fundraising round led by Fidelity Management, the social media network said on Thursday, cashing in on a jump in its influence in the financial world to triple its valuation to over $10bn.

The company said it had already raised $410m from Fidelity in its second funding round since the start of 2021 when small-time traders gathered on its platform in their battle against Wall Street institutions.

The traders, initially focused on Reddit's WallStreetBets forum but now spread across discussion boards, have changed how Wall Street analysts operate, causing major losses for some funds and powering huge gains in the shares of companies including GameStop and AMC.

On the back of the trading frenzy, Reddit's value had already doubled to $6bn in February from a year ago.

The San Francisco-based company was founded in 2005 by CEO Steve Huffman, entrepreneur Alexis Ohanian and the late Internet activist Aaron Swartz.

While Reddit has been a well-known internet name for years, attracting millions of experts and enthusiasts to its niche discussion groups, it has trailed behind other major social media sites in terms of its development as a business.

Although a hefty sum, the $10bn valuation pales in comparison to Twitter’s $52bn or the $1-trillion value of Facebook, both founded around the same time as Reddit.

As of January, Reddit had more than 52-million daily active users and over a 100,000 communities, dwarfed by Facebook’s nearly 2-billion daily active users in June or Twitter’s 206-million monetisable daily active users, a term for users who see the ads placed on their platforms.

Reddit topped $100m in advertising revenue for the first time in the second quarter, an almost threefold jump from the same period in 2020.

Its investors include venture capital firm Andreessen Horowitz, funds such as Sequoia Capital, Tencent and rap superstar Snoop Dogg. 

Reuters