Discord Inc. was founded as a labor of passion and needed to address a complex challenge faced by the online video-gaming community: providing a real-time communication platform that could keep up with the escalating technological demands of contemporary digital entertainment.
The gaming-centric messaging software eventually expanded to accommodate professional demands, suggesting a possible investment opportunity. On the other hand, prospective purchasers must weigh all factors before handing over their cash.
What Is An Initial Public Offering (IPO), And How Does It Work?
An initial public offering (IPO) is selling shares in a private company to the general public in a new stock issue. What's the point of becoming public? The main advantage of becoming public is more accessible access to finance.
To go public and hire an investment bank to underwrite the IPO. A company's track record of growth and other positive outcomes is required.The underwriters conducted their own due diligence and double-checked the financial facts and business model.
The corporation sells the shares to institutional investors after the documentation is completed. After the first block of shares has been sold. With the help of underwriters, the business determines an initial price and date for the shares to begin trading on a stock market.
What Is Discord's Purpose?
Discord, a popular communication platform, is part of a growing subset of chat applications, including Skype, TeamSpeak, and Slack. Jason Citron and Stan Vishnevskiy founded the site to share their love of video games with a more significant internet audience. On the other hand, communication methods were slow and unreliable while their company was still in the planning stages.
Discord aspires to transform the paradigm in this area permanently. Individual users may discover other gamers, organize gaming, and speak in real-time while engaging in different online contests using Discord's efficient and integrated platform. The system also enables video calls, audio chat, and text, allowing for various communication options.
Even though the company's roots are in digital entertainment, most Discord users today utilize the platform for reasons other than gaming. The platform has 250 million users, according to Digitaltrends, with 14 million checking in every day. The nationally syndicated The David Pakman Show, where the chat software allows fans to phone in and engage with the show's namesake host, is a perfect illustration of Discord's capability.
Discord rejects acquisition offers in favor of an initial public offering (IPO).
Several efforts have been made to get Discord, and Microsoft made a $12 billion bid on the business earlier this year. According to the Wall Street Journal, Discord turned down Microsoft. According to Bloomberg, Amazon, Twitter, and Epic Games have all made purchase proposals in the past. Instead, an IPO for Discord was said to be on the way, meaning that Discord shares may be purchased on the open market soon.
Even though the app has refuted the merger speculations, it has yet to issue an official comment. On the other hand, investors should start planning for Discord to go public through an IPO.
However, until a Discord IPO is announced, the firm — and its finances — remain hidden. On that front, the corporation hasn't provided much information. On the other hand, Discord has received funding from several venture capital groups. Greylock, IVP, Benchmark, Spark Capital, and Greenoaks Capital.
Furthermore, the firm has gone through multiple rounds of fundraising. The most recent investment round, which raised $500 million in September 2021, was the most current. Discord was valued at $15 billion after the fundraising round, and this is more than quadruple the $7.3 billion it was valued in December 2020.
Discord's Initial Public Offering (IPO) Information
The Discord IPO Has Yet To Get a Formal Announcement
The Securities and Exchange Commission (SEC) has yet to receive documentation from the business to commence the IPO process. However, in March, the company appointed its first-ever CFO.
Furthermore, the platform's board has been strengthened even further. Leslie Kilgore, a former Netflix (Nasdaq: NFLX) executive, was recently hired by Discord. Amrita Ahuja, the former CFO of Block (NYSE: SQ), has joined the company's board of directors.
The appointment of previous executives like Kilgore and Ahuja indicates that Discord is gearing up for an initial public offering (IPO). Both of these executives have previously worked for public corporations. According to Jason Citron, CEO, and creator of Discord, the duo has "amazing experience developing and coaching world-class organizations." This might indicate the arrival of Discord supply. Investors should also start planning now.
According to rumors, the Discord IPO will most likely occur in early 2022, and the New York Shares Market (NYSE) or the Nasdaq exchange is likely to list Discord stock.
While there is no formal IPO date, clues about the company's future aspirations to go public should get investors excited about Discord stock.
There are several chances to invest in gaming firms, ranging from Roblox (NYSE: RBLX) to Zynga (Nasdaq: ZNGA). And if you remain ahead of the curve and do your homework, you may make a lot of money.
As usual, do your homework before investing. Initial public offerings (IPOs) may be quite turbulent in the first several months. And the value of a company's stock might fluctuate rapidly. If you're interested in investing in initial public offerings, look at our list of the most recent IPOs and our IPO calendar. It is updated regularly to provide you with the most up-to-date information on planned and recently filed initial public offerings.
What Exactly Is the Discord Application?
Using Discord's instant messaging platform and app, users may communicate through voice, video, and text. Although the firm estimated in 2020 that 70% of its user base utilizes the site for non-gaming activities, it also provides gaming. On a weekly basis, Discord has roughly 150 million monthly active users and 19 million active servers.
People worldwide utilize the program, from local hiking organizations to art communities to study groups. It works with Windows, iOS, Android, and other programs, allowing users to sync their data with screen-sharing services like YouTube, Spotify, and Twitch.
When is the Discord IPO Scheduled To Take Place?
Since at least late 2021, Discord has piqued the interest of investors interested in a potential initial public offering (IPO), which is when a private company sells its stock to the general public for the first time. A non-public firm would often raise money via private-equity rounds, generally reserved for institutional or accredited investors prior to a new listing.
Public buyers now have more options for participating in ground-floor opportunities thanks to favorable legislation, most notably the JOBS Act, which was introduced in 2012 and eased restrictions initially imposed by the US Securities and Exchange Commission (SEC) regarding investing in small-to-medium-sized businesses.
Furthermore, some leading financial services brokers enable regular investors to participate in pre-IPO rounds or buy equity shares in private firms at their first offering price. Given the platform's popularity, if Discord decides to set a date on the IPO calendar for its market debut, there will undoubtedly be much interest in the offering.
Investors will have to wait a bit longer, however. Discord's management has neglected to file a Form S-1 prospectus with the Securities and Exchange Commission, despite expectations that the company may debut in early 2022. As a result, any information on Discord's IPO timing, deal size or even what exchange its shares may list on at the time of writing was purely speculative.
Nonetheless, the company's rapid fundraising speed suggests a public market debut. For starters, like any other private company getting funding from private equity companies, Discord must seek to provide a strong return on investment (ROI) to its early investors; otherwise, the chat software would lose credibility. An IPO is one of the fastest methods to compensate such stakeholders.
Discord will also be trying to grow its influence in the professional communication services industry, having dominated its first target market. This bold strategy involves competing directly with blue-chip companies such as Microsoft Corp. (NASDAQ: MSFT) and salesforce.com. CRM, the cloud-based software firm that owns the Slack platform (NYSE: CRM). In this case, an IPO would surely provide an influx of capital to assist Discord in achieving its objectives.
On the other hand, a new listing does not guarantee that Discord will succeed. The company's management might decide to postpone or even abandon its IPO. Even if it continues forward, the corporation will face other hurdles.
Specifically, the Federal Reserve's suggested shift to a hawkish monetary policy might jeopardize Discord's public debut. With consumer prices on the rise, the Fed has every reason to target the money supply, which has growing significantly over the last two years. This, however, will deter investment in growth-oriented software technology companies like Discord.
In other words, it is very possible that external variables unrelated to the core company might sabotage Discord's launch. As a result, careful examination of this possible opportunity must be balanced with thorough due diligence.
What Analysts Have to Say About Discord's Initial Public Offering
Because Discord has yet to declare its plans for an IPO, market observers have been hesitant to provide many predictions. The corporation may always choose a different path, obviating the need to explore the potential in one fell sweep.
Even if Discord decides to go public, most of the conversation will concentrate on the video-game industry's influence. The gaming market was worth $173.7 billion in 2021, according to Mordor Intelligence, and industry experts expect it will be worth $314.4 billion by 2027, indicating a 9.64 percent compound annual growth rate (CAGR) between 2022 and 2027.
Indeed, when it was announced last year that Microsoft was looking to purchase the messaging platform, there was much excitement. "We have moved forward a few years regarding consumer habits surrounding gaming," said Mat Piscatella of the NPD Group. "We are not likely to revert to pre-pandemic baselines concerning involvement or expenditure," Piscatella warned.
In other words, the new everyday phenomena of growing interest in video games and other social networking platforms are unlikely to go away very soon. Demand for Discord shares will very certainly increase due to such a situation.
Could the Discord IPO be a no-brainer with such positive statistics and outlooks? Put, no, and this is because every investment entails some level of risk. It is unclear if gaming-focused chat applications can maintain their high levels of digital entertainment engagement.
First, many customers are suffering from cabin fever due to two years of lockdowns and COVID-19 mitigation efforts. As a result, given the context of the epidemic, increased time spent in digital surroundings rather than in-person encounters seems to be an improbable trend.
Second, if uncontrolled, growing consumer costs might indirectly influence Discord, with users progressively preceding discretionary purchases in favor of essential goods and services.
Finally, expert predictions may not always come true. Take, for example, the electric automobile (EV).
While it may be the common belief that electric vehicles represent the future of transportation, according to author Robert Bryce, periodicals like The New York Times expressed similar ideas in 1911.
What Is The Worth of Discord?
Forbes estimates that the corporation is worth $17 billion.
In terms of funding, Discord has had a busy year. It raised $100 million in December 2020, valuing over $7 billion. The firm then raised an additional $600 million in September 2021, providing a consistent cash flow and a $15 billion value. Fidelity, Benchmark, Greylock Partners, and Franklin Templeton are among the private equity and venture capital companies that funded it.
What is the state of Discord's finances?
There is not a lot of financial data to report on since Discord is still a privately owned corporation.
According to Forbes, Discord made $130 million in income in 2020, up from $45 million in 2019, a threefold increase of 188 percent year over year. It uses a 'freemium' model, in which customers may supplement their free product with in-app features, games, and goods.
The pandemic of Covid-19 has proved to be quite advantageous to the corporation. Customers have used Discord in various ways over the last year, including gaming, organizing political campaigns, and staging virtual wedding ceremonies, according to a statement posted on the company's blog.
Potential for Discord
Discord's capacity to promote connection for both enjoyment and professional purposes endowed the underlying platform with particular importance as one of the benefactors of the COVID-19 crisis.
Discord helped maintain productivity among employees who were abruptly thrown into a whole new paradigm. However, it also helped ease the stress associated with social isolation during the doldrums of the epidemic.
Furthermore, Discord may have facilitated the relocation of certain families from urban areas to the suburbs, ensuring the platform's continuing importance as a crucial business method.
COVID-19 has the potential to take away what it has given. The shift to telecommuting, for example, may not be lasting. Another issue to consider is that, as the potential of cyberattacks grows, some businesses are concerned about becoming too reliant on technology, reducing Discord's income base.
Investors may be interested in a Discord IPO for a variety of reasons.
The digital gaming business is seeing unprecedented investor interest. According to Business Wire, companies like Roblox and Playtika had successful IPOs on the US stock market in 2021. The worldwide gaming sector will expand at a CAGR of 12 percent between 2020 and 2025. This might put the industry's worth at 169.7 billion dollars.
The Wall Street Journal reported earlier this year that three companies were in talks to purchase Discord for $10 billion, including Microsoft, Amazon, and Twitter. Although these ideas were shelved in favor of Discord remaining independent, the recognition from such well-known firms may have boosted investor confidence in Discord.
Instead of combining its service with an existing product of a big conglomerate, Discord's choice to refuse a sale from another firm helps retain its product offering distinct and maybe more appealing to investors and users alike. It could also be a brilliant idea, considering recent law in the United States that restricts mergers in the IT sector.
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