Discord is an online communications platform featuring text messaging, audio and video communication, streaming integration, and more ways for people to interact. The platform was initially a hit with gamers but has become a communication tool for all kinds of communities. When the COVID-19 pandemic forced much of our interaction online, Discord was one of the big winners.
But much of that communication is staying online, and this has investors itching to buy shares of Discord stock. For now, the company isn’t public, so those shares aren’t available to buy just yet. Learn more about this company and why you may want to consider investing if we see a Discord initial public offering anytime soon.
|Jason Citron and Stan Vishnevskiy
|San Francisco, California
|Number of employees
|Doesn’t exist yet
|Expected IPO date
Discord was co-founded in 2015 by Jason Citron and Stan Vishnevskiy. At the time, their mission was surprisingly simple: to help friends communicate while playing games online. But they found existing tools “slow, unreliable, and complex.” So Discord set out to build a communication platform that would help them achieve that goal.
When it launched in 2015, the application was an immediate success among gaming communities. Discord is available on almost any platform, including Windows, iOS, Android, web browsers, and gaming consoles such as PlayStation and Xbox. That compatibility helped propel its success.
In 2020, Discord began to position itself as not only a communication platform for gamers, but for any and all types of online communities. As a result, it now has 150 million monthly total active users and 19 million weekly active users. Discord is based in San Francisco, California, and has 600 employees globally.
Why do people want to invest in Discord?
Why are investors considering Discord shares? Discord is one of the most popular real-time communication platforms today and has carved out an important niche for itself in the online world. Although other tools do some of the same things as Discord, they tend to be less complete, aren’t as user-friendly, or simply don’t have the backing Discord has.
As the company has rapidly become one of the most popular communication platforms, it has made key hires from other tech companies that have undoubtedly increased interest in the company. In March 2021, Discord hired Tomasz Marcinowski, former head of finance at Pinterest to lead its finance operations. Then, in December 2021, it welcomed former Microsoft executive Liz Hamren as its new COO.
And there’s more to say about Microsoft. In March 2021, Bloomberg reported that Microsoft was in talks to buy Discord for an estimated $10 billion. Less than one month later, a Bloomberg report said Discord had rejected a $12 billion offer from the tech giant. Discord has also had acquisition offers from Amazon and Twitter.
After rejecting Microsoft’s offer, Discord is considering the possibility of becoming a publicly traded company. Although not much is known about a possible IPO, the company is flush with cash and well-positioned to go public in the near future.
Discord has completed funding rounds to shore up its cash reserves. For instance, it received its first cash injection of $20 million in 2016. In 2018, it secured $150 million, and was already valued at more than $2 billion after just three years. In late 2021, it raised $500 million, and by then, its valuation had climbed to $15 billion. That more than doubled the $7.3 billion valuation it claimed after its previous round of funding in December 2020.
Discord has many notable backers, including Spark Capital, Benchmark, IVP, Greenoaks Capital, Tencent Holdings, Index Ventures, and Greylock Partners.
Reasons to invest in Discord
If you are looking for a quality stock to add to your portfolio, Discord could be a smart investment if the company does decide to go public. Because it is still a private company, you don’t have quite the transparency you have with public companies in the form of quarterly reports and earnings calls. However, there are some numbers available that paint the picture of a financially healthy company.
For instance, in 2021, the Wall Street Journal reported that Discord increased its revenue from $45 million in 2019 to $130 million in 2020. Most of Discord’s revenue comes from its Nitro subscription, which users can buy for $9.99 per month or $99.99 per year. Despite the increase in revenue, though, we may have to wait until the company goes public to find out whether that translates into profitability.
Nevertheless, Discord may be a smart investment because it is an industry leader and arguably has no direct competitors. Other platforms such as Slack have similar functionality but have a business focus. Hence, at least for the time being, Discord could continue to grow its user base and subscription revenue.
Pros of buying Discord stock
- Opportunity to invest in a growing company
- Take advantage of the growing trend of remote communication
- Currently not much direct competition
Reasons not to invest in Discord
Although Discord has a lot going for it, we can’t say for sure it will be a good investment if the company goes public. For one thing, we don’t know enough about its fundamentals to determine whether it makes sense to invest.
For example, while Discord’s revenues tripled from 2019 to 2020, we don’t yet know whether it brings in enough to be profitable. Given that it makes most of its money from subscriptions, its revenue streams are somewhat limited. Notably, the company has an ad-free business model. That may be good for user experience, but it won’t help Discord be more profitable.
In addition, things are going well for Discord right now, but as mentioned, there isn’t much direct competition at the moment. Discord’s original mission was to help friends communicate while playing online games. Although that has extended to all online communities, there isn’t much to stop a competitor from developing their own platform that includes all of Discord’s functionality — and, perhaps, make it even better.
Discord has also been the subject of controversy. For instance, Discord gained popularity among alt-right groups in 2017 and was used in planning the Unite the Right rally in Charlottesville, Virginia, among other extremist demonstrations. Discord only became aware of the use of the platform for this purpose after the rally.
The ways in which Discord handles the controversies have implications for how its users feel about the platform. Those who feel there isn’t enough being done about certain activities on Discord may choose to go elsewhere. It should be noted that Discord acquired startup Sentropy in 2021, a company that makes AI software for the purpose of monitoring and removing online harassment.
Cons of buying Discord stock
- Uncertainty around whether Discord is profitable
- Future competition could be a threat
- Controversial use of the platform presents a risk
When to expect a Discord IPO
Discord has not officially announced an IPO or said when it might begin trading on a stock exchange. However, Bloomberg reported that the company is considering going public as soon as 2022, with the possibility that the date could be pushed to 2023. Discord is reportedly weighing its options, meeting with investment banks about taking the company public. It is also considering a direct listing, which companies like Spotify and Slack have already done successfully.
At this stage, we know very little about the details of a possible Discord IPO other than to say that the company has expressed interest in the possibility. Its most recent valuation puts an estimated price of $17 billion on the company.
How to buy Discord stock
Because Discord is not currently public, you can’t simply invest by visiting your favorite broker. In the meantime, one possibility is investing money in one of Discord’s numerous backers that are publicly traded today. These include FirstMark Capital (FMAC) and Tencent Holdings (TCEHY).
Another option for retail investors is to invest in similar companies available on the stock market. For instance, you could buy shares of Slack (WORK). You could also consider Microsoft (MSFT). Even though Microsoft failed to acquire Discord, it has similar products, such as Skype and Teams.
If you want to invest in any of these publicly traded companies, you will need an investment account. If you don’t have one yet, check out our list of the best investment apps and best brokerage accounts.
Lastly, if you are set on investing in Discord now, there are some trading platforms that offer pre-IPO trading, such as EquityZen and Forge. If Discord eventually announces an IPO, you might be able to secure some pre-IPO shares on those platforms before the company officially goes public. For more details, check out our EquityZen review.
What is Discord’s stock symbol?
Because Discord has not gone public yet, it currently does not have a stock symbol.
Is Discord a public company?
For now, at least, Discord is a privately held company, not a public one. That means you won’t find it listed on an open exchange.
How do you buy pre-IPO stock?
Aside from private equity, there are a couple of different ways to buy pre-IPO stock. That includes buying it from a pre-IPO broker and buying shares in publicly traded venture capital firms.
Discord may not be public yet, but it isn’t sitting still. In 2021, it added more updates than ever to its Nitro subscription. It said in a blog post that it added 300 Nitro-specific stickers as it looks to bring more value to its subscribers.
If you want to become a Discord investor, keep an eye out for an official IPO announcement. In the meantime, your best bet is to look for it on pre-IPO investment platforms or invest in Discord backers such as FirstMark Capital.
More from FinanceBuzz:
FinanceBuzz is not an investment advisor. This content is for informational purposes only, you should not construe any such information as legal, tax, investment, financial, or other advice.