How do you sow discord amongst the best communications apps? Well, for starters you launch Discord. Communications platform Discord has managed to attract millions of users with its easy-to-use features, especially amongst the video-gaming and crypto communities. So, it is no surprise that investors are curious to see how the Discord IPO will perform.
The Discord IPO is one of the most anticipated public offerings, expected to debut by late 2022. The company was founded in 2015 by Jason Citron and Stanislav Vishnevskiy, both of whom have a background in social gaming platforms.
The Discord IPO
When discord was launched, communication was unreliable and botchy. The founders wanted to offer a service that will make it easier to help gamers communicate. It has managed to do that more than that and Discord saw its US mobile usage more than double between Q1 2020 and Q1 2022. Experts also point out that the messaging app has started eating into Meta’s market share, which is based on Facebook messenger and WhatsApp.
In the last two years, Meta’s messenger services dropped by six percentage points that were picked by Discord. The app is popular with different communities as it is compatible with Windows, iOS, and Android, as well as other apps. Users can also sync it with platforms like Twitch, YouTube, and Spotify for screen sharing.
The Discord IPO date has not yet been announced, but analysts predict a late 2022 or early 2023 debut. It will most likely list on the New York Stock Exchange or on Nasdaq. In 2021, the Discord valuation stood at $15 billion. However, recent reports suggest that Fidelity recently cut its valuation for its Discord shares.
Risks and Market Watch
According to a recent filing, Fidelity, which invests in Discord and other startups through its massive Contrafund, slashed the value of its Discord stock to $373.65 per share in June. It is a 32% downgrade from the previous month, when Fidelity priced its Discord shares at $550.62 each.
In September, Fidelity warned investors to be cautious during a bear market. Analysts believe that the market could fall further depending on how high the Fed will go with rate hikes.
As interest rates have a huge impact on stock valuations, Fidelity blamed high inflation and the Fed for the stock market’s dismal performance.
Other than a consistently bearish market, the Discord IPO can also be affected by competitors like Slack, Skype, and Microsoft Teams, which have better reach. Discord only allows for communication between its users but many other services like Flock and Wire.
Discord primarily makes its money through subscriptions, although it has scope to generate revenue through other merchandise and games sold through its platform. The company reportedly has plans to develop its own in-house games.
There is no data to indicate that the company is profitable but experts believe that the company can utilize its additional revenue streams to be fruitful and expand its user base and margins. As of 2020, the company earned $130m in revenue up from $45 million in 2019. It is no secret that the company witnessed explosive growth during the pandemic, but Discord also admitted that online harassment and harmful links have also spread faster on the platform. The company is working to put an end to these and acquired an AI-powered startup, Sentrophy, to help them along.
There is no concrete data on what price Discord stocks will list at. Investors will have to monitor the SEC filing closer to the Discord IPO date for better details. Discord has been backed by institutional investors like Fidelity, Benchmark, Greylock Partners, and Franklin Templeton. According to Forbes, Discord’s valuation might go up to $17 billion.
