Popular social networking website Reddit.com has doubled its market valuation to about $6 billion following the completion of a $250 million funding round to its parent.
The funding round, which was led by venture capital company Vy Capital, comes just weeks after the website became the center of a social media-fueled Wall Street rally of unwanted stocks such as AMC Entertainment and GameStop.
The company's last funding round was completed in February 2019. During that time, Reddit was valued at around $3 billion. In its latest funding round, Reddit gained the support of several new investors, including venture capital company Andreessen Horowitz and Chinese tech conglomerate Tencent Holdings.
"It's a good market to fundraise. Valuations are very high right now. It never hurts to raise money when there's an opportunity to do so and Reddit had a strong year," Reddit's chief executive officer, Steve Huffman, said in an interview.
Huffman said that Reddit had recorded a 90% increase in its advertising revenue during its previous quarter ended December 2020.
To support its further growth, Huffman said that the company is planning to double its workforce this year to about 1,400 employees. The executive said that the plan to double its employee headcount was one of the main reasons why it had decided to raise new capital.
Last month, the audio-chat social networking app Clubhouse increased its market valuation to more than $1 billion after it completed its latest funding round. The company secured around $100 million in fresh capital through the funding round led by Andreessen Horowitz.
Reddit recently gained millions of new users, and advertising revenue, after the platform helped spur a Wall Street frenzy started by the WallStreetBet subreddit community. Members of the subreddit urged people on social media to buy shares of heavily shorted stocks, which resulted in an unprecedented rally.
The San Francisco-based company was originally founded in 2005 and quickly became popular for its public and private message boards. The company, which has yet to turn a profit, was acquired by Condé Nast in 2006, It then spun out into an independent company in 2011 with Condé Nast's parent Advance Publications retaining a substantial stake.
