Reddit has recently disclosed a significant reduction in its cryptocurrency assets, as indicated by a filing with the U.S. Securities and Exchange Commission (SEC). The popular social media platform, which previously acquired Bitcoin and Ethereum as part of its treasury strategy, confirmed that most of these sales occurred during the third quarter of this year.
In its filing, Reddit described its remaining cryptocurrency holdings as “immaterial,” indicating a strategic pivot away from maintaining large reserves of digital currencies. This decision aligns with Reddit’s preparations for an upcoming initial public offering (IPO), as the company seeks to bolster its financial stability and streamline its focus.
The timing of Reddit’s divestment appears unfortunate, as Bitcoin has recently undergone a substantial price rally, nearing its all-time high this October. The company sold its Bitcoin while prices fluctuated between $54,000 and $68,000, thereby missing out on the asset’s surge to approximately $73,000. This rally, commonly referred to as “Uptober,” highlights the inherent volatility and opportunity costs tied to cryptocurrency holdings within a corporate treasury.
Reddit’s engagement with cryptocurrencies, particularly Bitcoin and Ethereum, began with ambitious plans to integrate blockchain technology into its platform. This included launching the Vault cryptocurrency wallet and collectible avatars, enabling users to own digital items on the Ethereum blockchain through Polygon (MATIC).
However, the company has since distanced itself from several crypto-related initiatives, such as the Moons token and Collectible Expressions, which were ultimately phased out.
Despite these shifts, Reddit’s stock saw a 41% increase on Wednesday, reaching $116 per share. This surge followed the company’s announcement of a $30 million net income, significantly surpassing expectations and rebounding from a $7.4 million loss reported during the same quarter last year.
In its filing, Reddit expressed concerns regarding the long-term viability of blockchain technology, citing the speculative risks associated with cryptocurrencies. Consequently, the company has implemented a new policy requiring board approval for any future crypto investments, restricting these to assets deemed “likely not securities” to mitigate regulatory challenges.
While Reddit has scaled back its cryptocurrency investments, its app continues to feature the Vault wallet, granting users access to crypto rewards. Additionally, Reddit’s Collectible Avatars have achieved notable success, with over 18 million tokens minted, indicating that while the company is adopting a more cautious stance towards blockchain, it still retains some involvement in the crypto space.
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