In a significant move, Fidelity, the lead investor in Reddit’s latest funding round in 2021, has reduced the estimated value of its equity stake in the popular social media platform by 41% since the initial investment.
According to Fidelity Blue Chip Growth Fund’s recent monthly disclosure, their stake in Reddit was valued at $16.6 million as of April 28. This marks a cumulative decrease of 41.1% since August 2021 when the asset manager spent $28.2 million to acquire the Reddit shares, as indicated in the firm’s annual and semi-annual reports.
During the August 2021 funding round, Reddit boasted a valuation of $10 billion. Fidelity, which has been marking down its stakes in several startups, including Reddit and Stripe, has also revised the value of its stake in Twitter. The filing reveals that Fidelity now values Elon Musk’s firm at around $15 billion.
When approached for comment, Reddit declined to provide a statement.
This devaluation aligns with a broader trend affecting numerous growth-stage startups worldwide over the past year. It raises concerns about whether Reddit will proceed with its reported plans to go public at a valuation of approximately $15 billion.
To date, Reddit has successfully raised over $1 billion in funding and enjoys the support of notable backers like Sequoia Capital and Andreessen Horowitz.
The current wave of valuation reductions sheds light on the impact of deteriorating global economic conditions on nascent startups. Despite a decrease in funding activities for startups globally over the past year, the valuations of many larger startups have remained steady.
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