- Reddit raised $300 million at a $3 billion valuation, up from a $1.8 billion valuation in 2017, when the company took in a $200 million investment.
- Reddit had focused efforts to clean its platform to attract advertisers
Reddit has faced criticism for its lax regulation around hate speech, piracy, harassment and even election interference. As a result, the social media company is seeing valuations much lower than peers because advertisers have shied from Reddit.
Reddit has roughly 330 million monthly active users (MAUs), making it on part with Twitter. Yet, monetizing efforts have been significantly lower. It’s estimated that Reddit revenues are approximately $100M. This means that each monthly active user is worth about $0.30.
To compare, Facebook (NASDAQ:FB) yields a average revenue per MAU of $7.37 and Twitter (NYSE:TWTR) of $2.83.
Reddit has focused its efforts over the past year on cleaning up its platform to build a better advertising model. As a result, it has cleaned up its site and focused on more lucrative advertising opportunities, primarily video. Investors have rewarded the company most recently with a $3B valuation.
Article by: Mick Ross
Mick is currently a full-time investor and formerly a buy-side analyst (2yrs) covering healthcare companies. Before that, he was a salesperson at a bulge-bracket firm, based in Dallas, Texas. Mick blogs to clarify and synthesize his investment thought process and to elicit feedback; additionally he likes to connect with other investors and swap ideas.