Fidelity, the lead investor in Reddit’s 2021 funding round, has reduced the estimated value of its equity stake in the popular social media platform by 41% since its initial investment. According to the monthly disclosure of Fidelity Blue Chip Growth Fund, its stake in Reddit was valued at $16.6 million as of April 28, representing a cumulative decrease of 41.1% since August 2021 when Fidelity invested $28.2 million to acquire the shares.
At the time of Fidelity’s investment, Reddit had a valuation of $10 billion. However, Fidelity has been marking down its stakes in various startups, including Reddit and Twitter, in recent quarters. The asset manager now values Reddit at a lower figure of approximately $15 billion, and its stake in Twitter has also been devalued.
The majority of the markdown in Reddit’s value by Fidelity occurred last year, with minor reductions in subsequent months. While Fidelity has made smaller valuation cuts in its holdings of other companies, such as Indian startups Meesho and Pine Labs, the markdown of Reddit’s value stands out as more significant.
This devaluation trend reflects the broader impact of challenging economic conditions on growth-stage startups worldwide. It raises uncertainties about whether Reddit will proceed with its reported plans to go public at a valuation of around $15 billion. Despite the decline in funding activities for startups globally over the past year, the valuations of many larger startups have remained relatively stable.
Reddit, which has raised over $1 billion in funding, counts Sequoia Capital and Andreessen Horowitz among its backers. In late 2021, the company was valued as high as $15 billion in secondary markets, according to sources familiar with the matter.
