If you’ve got kids, you’ve probably heard of Discord.
Since publicly launching in May 2015, Discord has taken the gaming community by storm.
At heart, it’s a communication platform – which combines the slick, ergonomic chat interface of apps like Slack, with the voice and video-call function of apps like Skype.
Setting up a Discord account is absolutely free – and offers users a chance to connect to all kinds of communities. Users can create and join private and public groups called servers to connect with friends or others with similar interests. Popular games like Fortnite and Apex Legends have their own dedicated servers; account holders can also create private servers for file sharing and chat.
Discord is the brainchild of Chief Executive Officer Jason Citron – a man with serious credentials in the gaming industry. He sold the gaming platform OpenFeint to GREE for $104 million in 2011, and launched the development studio Hammer & Chisel in 2012.
But Citron understood that gamers remained heavily constrained by the limits of voice over IP (VoIP) technology. It was hard to communicate during matches, let alone to strategize and plan tactics. Enter Discord.
Since Discord easily allows gamers to schedule sessions, and enables chat during them, the app quickly built momentum in the gaming community. Before long, it became the go-to app for Twitch streamers, as well as Esports and LAN tournaments; in April 2018, Microsoft enabled users to link their Discord and Xbox Live accounts.
While Discord organically developed a huge following within the gaming community, you don’t have to be a genius to see its wide-reaching potential – particularly in the post-Covid landscape.
Indeed, since 2020, Discord has noticeably changed tack, shifting its focus towards all-purpose communication.
As Discord proudly states on its website, ‘Imagine a place where you can belong to a school club, a gaming group, or a worldwide art community . . . A place that makes it easy to talk every day and hang out more often.’
That’s Discord – which, as of 2022, can lay claim to over 150 million monthly active users. Close to a billion messages are sent via the platform every single day – and it’s still just getting started.
So, is Discord stock a solid investment? First things first, let’s drill a little deeper into the company’s financials.
Discord Company Overview
Valuation – $15 billion (August 2021)
CEO – Jason Citron
Funding – $982.6 million (14 rounds)
Major Investors – Dragoneer Investment Group, Greenoaks Capital, Sony Interactive Entertainment, Index Ventures, Alexander Rugaev, Institutional Venture Partners, Spark Capital, Greylock Partners, Benchmark
2021 Revenue – $7 billion
A brief history of Discord
Potential Discord investors will no doubt be encouraged by the fact that the app has shown continuous growth since its inception.
Indeed, a quick glance at Discord’s annual revenues reflects the prodigious growth the company has enjoyed. From $5 million in 2016, annual revenue had jumped to $30 million in 2018. By 2020, Discord’s annual revenue had risen to $130 million – more than the previous four years combined. Headquartered in San Francisco, the app continues to innovate and add new features – and shows no signs of slowing down anytime soon.
A deeper dive into Discord’s numbers shows its remarkable popularity. Around 963 million messages are sent via the platform every single day – with around 19 million dedicated servers active on Discord at any given time. The average user spends around 3 hours per month on the app.
And, it has proven very popular with users. In fact, a recent survey showed 3% of US teens ranked Discord as their favourite social platform.
No doubt, Discord’s ability to continually innovate has fueled the growth. The company introduced Discord Nitro – a premium platform offering a wide range of benefits – in January 2017. Users can now upgrade from Discord’s free offering to two different premium packages, and also have the option of purchasing Server Boosts.
Potential Discord investors should also be boosted by the company’s own acquisitions.
In November 2018, they bought Blitz App – an AI-powered ‘gaming coach’.
Discord followed up by acquiring Sentropy in June 2021. Using AI-powered software, the company can detect and remove online harassment and hate speech. Integrating Sentropy’s software into its own products should considerably ease the burden on Discord’s Trust and Safety Team – which accounted for 15% of company employees in May 2020.
Finally, in July 2021 Discord bought the augmented reality startup Ubiquity6. These acquisitions are suggestive of a company with a clear eye on the future. Indeed, many analysts predict that Discord will continue to go from strength to strength in the years to come.
In addition to Discord’s own acquisitions, several other companies, including Twitter, were rumoured to be interested in acquiring Discord during the course of 2021.
In April, it was widely reported that Microsoft tried to acquire Discord for $12 billion – but had their offer rebuffed.
Clearly, the fact that Discord’s owners were willing to reject such a large sum of money reflects their confidence in the platform. Many expect the app to continue to make waves in new markets, and to provide increasingly stiff competition for other popular applications that provide chat functionality.
So, can I buy Discord stock?
As of March 2022, investing directly in Discord is not possible because the company isn’t publicly listed. While you can’t buy Discord stock – at least not yet, anyway – you can indirectly back Discord by investing in the private equity firms who fund the company.
Will there be a Discord IPO anytime soon?
Ever since Microsoft’s attempted acquisition of Discord fell through, there have been widespread rumours that Discord plans to launch an IPO.
While no official application has been filed with the SEC as of February 2022, many analysts expect Discord’s IPO to arrive before the end of the calendar year.
Some experts have also suggested that Discord’s list of investors may give an insight into the company’s future.
Strikingly, Discord has received investment from a number of private equity firms – including Dragoneer Investment Group, Greenoaks Capital, Index Ventures and Spark Capital.
Such a strong list of institutional investors shows the level of confidence surrounding Discord. These kind of institutions back private companies in the expectation of major profits; the level of institutional investment in Discord suggests either a major acquisition or IPO is on the horizon.
Can I do anything before Discord IPO launches?
There are some pre-IPO markets where it might be possible to pick up stocks before the Discord IPO itself arrives.
Forge Global, EquityZen and SecFi are three firms that deal in pre-IPO shares. That said, there is no guarantee that any of these markets will have Discord stock for sale.
Investing in a private company pre-IPO offers potentially prodigious profits, it is certainly not without risk.
There is no guarantee that the company will go public; likewise, it is impossible to predict the future landscape – there is always the possibility that an IPO could fail or that the public may show limited interest in a company’s stock.
As such, many retail investors may feel more comfortable waiting for an IPO, or picking up Discord shares on the public market once the IPO has concluded.
What about the competition?
Of course, probably the greatest hurdles to Discord’s success is competition. There are several other apps with potentially similar capabilities: established tech giants including Facebook, Google and Whatsapp; as well as upstarts like Zoom, Slack and Clubhouse.
If you feel confident that chat apps will continue to flourish in years to come, but don’t want to wait for Discord stock to be released, why not pick up shares in one of its competitors? The likes of Facebook, Twitter, Zoom and Slack are all publicly listed – meaning you can pick up shares today, and continue to broaden your portfolio.
