Reddit’s Valuation Doubles
Social media website Reddit has been one of the hottest topics in the news over the past two months. If you do not already know, Reddit is a website with over 100,000 active communities called subreddits where millions of users can practically talk about anything.
Members of the infamous subreddit, WallStreetBets, have sent stocks like GameStop and AMC to the moon, solidifying one of the largest short squeezes in history. While the two companies have plunged considerably over the past five days, GameStop and AMC’s shares are still up over 150% and 140% in the past month, respectively. This social media-driven short squeeze was unprecedented, squeezing some of the wealthiest hedge funds out of billions of dollars. A recent poll by Yahoo Finance reported that 28% of Americans bought at least one of the viral “meme stocks.”
The influence that social media platforms like Reddit can have on financial markets cannot be understated. Traders and investors can use Reddit to demystify the markets and find new investment opportunities. Since most people probably don’t have the money to afford a fancy financial advisor, they are using platforms like Reddit to take control of their finances.
On Monday, Reddit said the company raised over $250 million in a new round of funding from new and existing investors, doubling its total valuation to around $6 billion. The company also said advertising revenue rose 90% in the last quarter year over year and that they have “decided that now was the right opportunity to make strategic investments in Reddit including video, advertising, consumer products, and expanding into international markets.”
As Reddit grows and expands globally, we could potentially see more people using the website to participate in the stock market.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
