Reddit doubles in value, now worth R88bn – With insights from The Wall Street Journal

For a 15-year-old business that has never made a profit, Reddit's R88bn valuation seems steep. But some very savvy investors are among its shareholders, including Naspers Group's 31% associate Tencent. Reddit's co-owners have just injected another $250m into the social media message board – at double the valuation of the previous fund raise just over a year ago. Here's the exclusive inside story from our partners at The Wall Street Journal. – Alec Hogg.Use Spotify? Access BizNews podcasts here..Use Apple Podcasts? Access BizNews podcasts here..___STEADY_PAYWALL___.Reddit's valuation doubles to $6 billion after funding round.Its WallStreetBets community played a prominent role in recent stock-trading frenzy.By Sarah E. Needleman of The Wall Street Journal.Feb. 8, 2021 8:13 pm ET.Reddit Inc. doubled its valuation to $6 billion in a new round of funding that comes as the social-media company has added users through the Covid-19 pandemic and more recently has gained attention for its role in the recent Wall Street trading frenzy..Reddit on Monday said it raised $250 million in a late-stage funding round led by venture-capital firm Vy Capital. Previously it was valued at $3 billion after its last funding round in February 2019, according to PitchBook, a provider of private-market data. Current investors in Reddit also include venture-capital firm Andreessen Horowitz and internet conglomerate Tencent Holdings Ltd.."It's a good market to fundraise," Reddit Chief Executive Steve Huffman said in an interview. "Valuations are very high right now. It never hurts to raise money when there's an opportunity to do so and Reddit had a strong year." For example, advertising revenue for the company shot up 90% in the December-ended quarter from a year earlier, he said.The funding for Reddit comes just weeks after upstart audio-chat social network Clubhouse raised fresh capital. Clubhouse was valued at $1 billion last month after securing $100 million in a funding round led by Andreessen, according to PitchBook.San Francisco-based Reddit, founded in 2005, is known for its message boards on a multitude of topics, as well as its "ask me anything" digital town halls with celebrities, politicians and subject-matter experts. The company, which isn't profitable, was sold to Condé Nast in 2006, and the magazine publisher's parent, Advance Publications Inc., spun Reddit off in 2011 and remains a shareholder. The company has raised roughly $800 million since 2011.Mr. Huffman said Reddit plans to use the new funding to invest in areas such as video, advertising and consumer products, as well as to expand into international markets. Late last year Reddit bought video-sharing app Dubsmash to expand its presence in user-created video, one of the hottest corners of the internet, for an undisclosed sum. "Our strategy isn't materially changing," Mr. Huffman said.Reddit is also planning to double its employee head count this year to around 1,400, Mr. Huffman said, noting that one reason the company raised new funding was to help it attract talent. Reddit recently hired a handful of executives who will start in the coming months, he added, declining to specify their titles or name them.The financing deal comes after Reddit's WallStreetBets community gained attention as some members successfully egged on people to buy shares of heavily shorted stocks such asGameStop Corp. U.S. regulators are now probing whether the ensuing market upheaval resulted in securities-law violations.The incident has helped bring Reddit millions of new users as well as new advertisers, which provide the company's main source of revenue, Mr. Huffman recently told The Wall Street Journal.Reddit lets users rate all posts and comments on the platform and relies on tens of thousands of its own users to voluntarily to police speech. By contrast, larger social-media platforms such as Facebook Inc. and Twitter Inc. rely mainly on algorithms and paid help to do that kind of work.The most recent user numbers from Reddit put the daily average at 52 million as of October, which was up 44% from the same month a year earlier.Facebook said it had roughly 1.85 billion daily users in the December quarter, while Twitter most recently said it averaged 187 million daily users in the three months ended in September. Snap Inc., the parent of ephemeral-messaging platform Snapchat, ended the December quarter with 265 million daily active users.Write to Sarah E. Needleman at sarah.needleman@wsj.com

Reddit doubles in value, now worth R88bn – With insights from The Wall Street Journal

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