The Next Wave of Social Media IPOs and What Investors Should Know
The Social Media industry has not remained stagnant and has been going through significant positive changes over the years.
The industry has moved away from the more traditional platforms and has transitioned towards utilizing community design and facilitation user engagement. As more and new traditional platforms develop the old needs for purpose and engagement.
Currently a popular company is Discord and more industry observers are anticipating to observe what the company will do with its upcoming IPO. The expected IPO is not linked with regular technology company IPO’s and is indicative of a more evolved industry.
Currently, the technology industry is more positive now with predicting growth in the upcoming years.
The previous technology companies attempted to grow too rapidly and in turn became unproductive.
Currently, the industry is focusing on more realistic growth and observing a more control with the current investors with their support of companies.
They want to see:
- Real revenue
- Clear business models
- Long-term potential
So yeah, the rules have changed.
Why is everybody talking about the Discord IPO
Let’s talk about Discord
If you have used Discord you already know that is not like using Facebook or even Instagram.
Those have never-ending feeds that show you random things based on an algorithm.
With Discord, you are actually a part of a community.
You can join different servers for different things like gaming, studying, or even business.
This is exactly why people are looking at the discord ipo.
It’s different from all the other social media that have been released that people just scroll on.
From “Grow Fast” to “Make Money”
Back then, companies could go public by just showing massive user growth.
Now, that’s not enough.
Investors are asking more questions like how does this platform make money?
Are the users even willing to spend money on anything?
This is a huge test for Discord.
Currently, most of their earnings come from a premium subscription service, Discord Nitro, which offers additional perks. However, in order for Discord to go public, they need to find a way to increase, scale, and stabilize revenue without disrupting user experiences, which is difficult.
Community is the New Social Media
Perhaps the largest recent shift in social media is the change from targeting mass audiences to focusing on smaller, niche communities.
This shift is largely due to user fatigue from:
- random and unrelated content
- artificial engagement via bots
- the overwhelming algorithms and advertisements
Users are seeking social media platforms that encourage:
- real and authentic conversation
- groups of people sharing genuine interests
- smaller and more personal online communities
Platforms like Discord are ideally positioned to meet the needs of online users.
From an investors perspective, this is even more significant because the community-based platforms increase dwell time, user engagement, and provide more options for targeted monetization.
Community-based platforms will likely remain the most popular for social media users in the future.
Key Factors Moving Social Media IPOs from Community-Based Platforms
Let’s keep this brief. There are several key drivers behind this most recent wave of social media IPOs.
Creators Have the Power
The most profitable social media accounts are not just creators, they are business owners. Social media investors are paying for social media platforms that simplify revenue generation for content creators via subscriptions and exclusive content.
Subscription-Based Models over Advertising
Users of social media are increasingly annoyed by advertising. Social media platforms are recognizing this consumer trend and are beginning to change their business models to prioritize subscription-based models.
They are moving away from relying solely on advertisement revenue, and instead adopting the following:
- Paid features
- Premium memberships
- Exclusive access
Discord does this already with Nitro.
AI is now everywhere
When it comes to social media, AI is used for things such as:
- Content recommendations
- Moderation
- Personalization
The investors are the ones who love it because it makes the experience better for the user and also makes things more efficient.
Small is good
When it comes to social media, it may seem weird, but not every single platform needs billions of users.
An audience that is more engaged and is smaller is more valuable than a huge audience that is less engaged.
The risks of IPOs
The hype around it can be exciting, but let’s be real, it can also be very risky and can lead to huge losses.
Here are a few risks that you should know about:
Overhyping
Sometimes because of hype, businesses can be overpriced and end up losing a ton of money really quickly.
Not enough data
When looking for new businesses, it can be extremely difficult to make an educated guess about future earnings because there is very little information to help conclude anything.
Profitability
Once again, when it comes to new platforms, it can be very difficult to show that the users can create a profitable revenue.
The market can change
When it comes to the market, everything can seem good, but it’s very common for it to turn south very quickly, even if the overall market is in a good place.
Lessons from past social media platforms
Until now, time and past social media platforms, as well as major business created a path that continues to give us the answers to the questions that we have.
Every social networking app has its own history.
Here’s a first summary:
- Facebook first faced difficulties, then became very successful
- Consistent growth was hard for Twitter
- Initially Snapchat was unstable, but then did much better
These examples tell us that first impressions are not always accurate.
What Makes Discord Different?
Discord has not just built another social app.
Discord stands out because of:
- A social feed that isn’t algorithm based
- An emphasis on communities and community building
- Breaking out of just gaming
- Flexible monetization options
This is the sort of basis that makes the Discord IPO feel important. It could set a precedent for future social platforms.
The Bigger Shift
This is not just about a single company going public. It relates to the future of social media.
The direction we are moving towards is:
- Platforms where users build communities
- Ecosystems that prioritize creators
- Less clutter and more useful content
- An overall improved experience for users
This is a direction that a lot of social media users have been hoping for.
Final Thoughts
The next set of social media IPOs are going to look a lot different than the ones that have already occurred.
The Discord IPO is the first of many to lead this change, and it shows that social media platforms do not have to be crazy and huge to be successful. They just have to be meaningful.
This gives investors new opportunities but also new challenges.
If you’re thinking of investing in social media companies going public, don’t rush it. Understand the company’s business model and don’t get swept up in the excitement.
It’s not about who goes public. It’s about who will still be around in the years to come.
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