Now you know the story: A group of retail traders have helped send shockwaves through the stock market in recent weeks by taking bets that mainstream investors would deem absurd. Shares of video game retailer Gamestop at one point hit $ 347 each after languishing among senior teens weeks earlier.
Now, the social media platform that housed the community that started it all has doubled its value.
On Monday, Reddit said it had raised $ 250 million in funding, valuing the company at $ 6 billion. Last valued at $ 3 billion in 2019, the latest round of funding is led by Vy Capital.
The new round of funding comes as Reddit finds itself at the center of a few big themes here:
A. Communication went online as a result of the pandemic.
Private market investors over the last few months have warmed towards social media investing (ahem, Flag).
C. Home orders and the recent Gamestop saga fueled a spike in stock trading and therefore attracted millions of additional users to Reddit’s infamously irreverent r / WallStreetBets community.
Many find the beginnings of the Gamestop rally in the posts of r / WallStreetBets users inflicting painful losses on hedge funds bypassing the games company. With Gamestop’s shares now going down to earth at around $ 50 each, the impact of the old rally has been far from negligible. No, the story might not be David versus Goliath, retail trader vs Wall Street story woven from the start, because many big investors also benefited from the stock market. But the main thing remains: small traders have shown their ability to move the market.
As for Reddit, the incident resulted in “millions of new users as well as new advertisers”, according to the wall street journal quoting CEO Steve Huffman. The incident was so big that Reddit even hinted at the Gamestop saga in its five-second full-text Super Bowl commercial. “Big game seats are expensive, so we couldn’t buy a full one”, broadcast ad. “One thing we learned from our communities last week is that underdogs can accomplish just about anything when they have a common idea.”
Also according to the Newspaper, 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.” Last year, the company acquired a video and memes sharing app, Dubsmash.
ROBOTS IN THE KITCHEN: Food delivery company DoorDash (NYSE: DASH) to acquire Chowbotics, maker of a salad assembly robot, for an undisclosed sum. Previously backed by investors including TechStars, the acquisition of Chowbotics is certainly a sign that DoorDash believes its future doesn’t just come down to the delivery side of things, but also some degree of automation of preparation.