REUTERS: Reddit Inc has doubled in value to US$6 billion as the social media platform at the heart of last month's retail stock trading frenzy raised more money to handle the rush of new subscribers.
The company, which now has more than 50 million daily active users, announced a US$250 million fundraising round on Monday led by venture capital firm Vy Capital and added that it would use the new funds to expand further.
Reddit was valued at US$3 billion in its last round in February 2019, and the surge in its value follows a 90per cent jump in advertising revenue from a year ago.
"We decided that now was the right opportunity to make strategic investments in Reddit including video, advertising, consumer products, and expanding into international markets," the company said in a blog post. (https://bit.ly/3p37uC3)
The platform has garnered attention in the past month for the role of its forums in driving massive fluctuations in the share price of videogame retailer GameStop Corp, cinema operator AMC Entertainment Holdings Inc and a number of other mid-sized and previously unloved companies.
Reddit Chief Executive Officer Steve Huffman told the Wall Street Journal it was a good market to raise funds. (https://on.wsj.com/2N5U62)
"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," Huffman said, according to the WSJ report.
Reddit is not the only company to have benefited from the frenzy, with audio app Clubhouse also seeing its valuation surge to US$1 billion after raising fresh funds last month.
Reddit, which counts the likes of Andreessen Horowitz, Sequoia Capital and Tencent Holdings among existing backers, was founded in 2005 by current CEO Steve Huffman, entrepreneur Alexis Ohanian and the late Internet activist Aaron Swartz.
It became popular due to its message boards that allow anyone to post messages or articles and ask the community to vote up or down on those topics.
(Reporting by Rama Venkat and Kanishka Singh in Bengaluru; Editing by Shounak Dasgupta and Saumyadeb Chakrabarty)