Tencent Reportedly Plans to Invest $150 Million in Reddit's Series D

The investment would be a diversification for the Chinese giant, which has been facing touch competition domestically, as well as curbs in the gaming industry.

Anna Vodopyanova
    Feb 07, 2019 5:17 PM  PT
Tencent Reportedly Plans to Invest $150 Million in Reddit's Series D
author: Anna Vodopyanova   

Chinese conglomerate Tencent Holdings Inc. (HKEX: 0700) is expected to lead the latest round of funding for the popular American news discussion platform, Reddit Inc., that could spearhead its valuation to as much as $3 billion.

The San Francisco-based company, which counts 330 million monthly active users and 18 billion page views per month, is shooting to raise between $150 million and $300 million in its Series D round of funding, according to  TechCrunch citing sources. The money is meant "to keep the front page of the internet running," the report said.

Tencent, one of China's Big Three giants, operates businesses across various industries with a special focus on gaming and entertainment. It is a major player in the country's most popular social media WeChat, as well as two companies recently listed on Wall Street – the music conglomerate Tencent Music Entertainment Group (NYSE: TME), and social fashion platform, Mogu Inc. (NYSE: MOGU).

Reddit, where users discuss and mock everything from politics to pornography, is one of the five most-trafficked websites in the United States, according to CNBC. Last year, the 13-year-old company hit revenue of $100 million for the first time, generating capital from ads and promotions, the news agency reported. It said Reddit has been trying to expand aggressively and attract new advertisers. CNBC compared the social platform with Twitter, saying the latter gained $655 million in ad revenue during its first quarter alone.

The investment of $150 million into Reddit is for Tencent "a savvy diversification," TechCrunch said, as the Chinese giant has been dealing with tough competition domestically, as well as Beijing's crackdown on gaming.

In August, when China tightened regulations in online gaming citing rising levels of myopia, Tencent's market value slumped by approximately $20 billion. Only last month, two of the company's games were approved after a freeze on new video game permits that lasted since March.

The details of Reddit's latest fundraising, as well as other investors signing on the deal, have yet to be announced.