How To Buy Discord Shares
Discord is a popular communication software rumoured to be preparing to make its shares available to the general public via an IPO.
Although there is no confirmed date for Discord’s IPO yet, it represents an exciting investment opportunity thanks to the software’s growing popularity and growth potential.
In this article, we look at:
- what Discord is
- what the future could hold for the company
- what an IPO is
- and how you can buy Discord shares at their initial IPO price when they become available
What is Discord?
Discord is a leading VoIP (Voice over Internet Protocol) and instant messaging software, particularly popular within the gaming community and other large online communities.
Discord was specifically developed to be used by video game players, and is particularly popular for its group communication tools.
Although the app can be used for one-to-one direct messaging and video calls for small groups, the maximum capacity of Discord’s servers and channels sets it apart from other video and messaging software.
One Discord server can hold over a million members – a capacity that has been reached by some specific video game servers – and this allows for wide-scale collaboration and communication among massive online communities.
Within each server, users can create separate channels for more specific topics of communication. Channels can facilitate shared instant messaging tools, group voice calls, media sharing, screen sharing and video calls.
What is an IPO?
IPO stands for Initial Public Offering, and it is the process of a company making its shares tradeable to the general public through a stock exchange.
A private company, or an “unlisted” company, can only raise funds from private investors – their shares aren’t available to everybody.
When a company lists their shares on a stock exchange and makes them available to everybody, it typically leads to the company raising large amounts of money through new investors.
To reflect this influx of money into the company, they will try to value its shares at a fair and accurate price before making them public to ensure they remain as stable as possible after launch.
However, companies often overestimate or underestimate the value of their shares compared to demand on the market, and IPO stock prices can fluctuate a lot in the short term after launching.
This effect can be multiplied by short-term traders trying to make quick profits from this volatility, particularly for well-known companies already in the public eye like Discord.
Discord IPO Outlook and Target Market
While Discord was originally designed to be used by gamers, in 2020 the company announced that it was shifting focus away from video gaming customers towards a more general communication and chat client for various functions, releasing a new slogan “Your place to talk”, along with a new website.
In fact, the company has said that around 70% of its customers now use the platform for non-gaming purposes.
The software is also used for activities such as virtual classes, clubs and conventions (all of which are immensely more popular since the global pandemic). It now has over 140 million users every month, and earned $130 million in revenue in 2021.
When is the Discord IPO, and what are the details?
In March 2021, Microsoft were looking to purchase Discord for an approximate valuation of $10 billion, however, the deal fell through with co-founder and CEO Jason Citron stating that the company had ended talks, opting to remain independent.
Since then, many experts believe that Discord is looking to go public in the near future to raise additional funds, and the company has recently appointed its first CFO, former head of finance for Pinterest, Tomasz Marcinkowski, who would be capable of managing the company through this transition.
As of yet, there is no confirmed date for the Discord IPO; however, we explain how you can register for news updates on this later on.
How do I invest in the Discord IPO?
You have to open an investment account to buy new stocks at their initial IPO price.
Freedom Finance is a leading EU stockbroker, and their investment trading platform, Freedom 24, gives you exclusive access to hundreds of IPOs, including Discord’s potential IPO listing.
Freedom Finance gives you instant access to over a million trading vehicles, including stocks, ETFs, bonds, futures, and options on major American, Asian and European stock exchanges. It currently offers the cheapest price for US options in Europe at just $0.65 per contract, and you also benefit from a USD savings account with an attractive interest rate of 3%.
How can I buy IPO shares?
Because IPOs can be so popular, the total number of applications for IPO shares usually far outweighs the amount the company make available.
This means that most investors aren’t granted all of the shares they try to buy, and instead are only allocated a percentage of their application.
For Freedom24 customers, your percentage of allocated shares is based on your Freedom24 customer rating.
So, the higher your Freedom24 customer rating, the more shares you can be eligible for when the Discord IPO launches.
How to boost your Freedom24 customer rating
To increase the number of new stocks you can secure at the IPO price for stocks like Discord, you need to create an account early to build up your customer rating before the IPO launches.
The more you trade and invest within your stockbroking account, the higher your customer rating, and this entitles you to a greater percentage of stocks at the IPO price that you apply for.
How do I open a Freedom24 IPO account?
1. Start by opening an account on the Freedom24 platform – the process is streamlined and only takes about 10 minutes. You need to provide some basic personal information and proof of ID which can be uploaded electronically
2. Top up your account with a debit card or bank transfer, and you’re ready to start buying shares to boost your customer rating
3. You’ll get notifications about when Discord’s IPO launches, but in the meantime, have a look at some of the other IPO opportunities available through the platform
4. Once you’ve chosen an IPO to invest in, either the Discord IPO or another company, you can apply to purchase stock at the original IPO price and confirm the amount you want to invest
5. The day before the IPO, your applied amount will be locked in your account for trading. Any unused funds will be refunded to your account the next day
6. After the IPO date, there is a lock-up period of 93 days, during which your IPO shares cannot be sold. This is to avoid the impact of volatile market fluctuations from quick sales
7. After the lock-up period, you will receive your new shares at the IPO price and at this point you can either sell them straight away or hold them as a long term investment.
Does it cost money to invest in IPOs?
By investing in IPOs through the Freedom24 platform, you can minimise the costs of investing in companies at the earliest possible opportunity.
Freedom24 offers a 0% trading commission deal for the first 30 days of using your account (excluding IPO stocks).
Utilising this 30 day grace period is a great way to build up your customer rating early on for free, as it will enable you to get more IPO stocks later on.
After this grace period, here are the need-to-know charges for the Freedom24 platform:
- Share Dealing Fees: Freedom Finance provides multiple different tariffs. This is so you can choose a tariff that fits your trading style while keeping your fees to a minimum. For example, a very active trader will likely want to select a different tariff than somebody planning to hold stocks for the long term and trade less.
- Withdrawal Fees: Freedom Finance charge a transparent withdrawal fee of €7.
- IPO Price Share Dealing Fees: Buying new stocks at IPO price is treated differently from regular share trading, and fees for purchasing IPO stocks are applied even during the first 30 day grace period of your account.
Here’s how it works:
The fees you pay for buying new stocks at their IPO price depend on the value of available assets in your investment account on the day before the IPO.
The value of assets you hold is comprised of your cash holdings plus the value of your existing investments:
- If your total assets are under $20,000, the IPO stock purchase commission will be 5% of your transaction
- For assets of $20,000 to $49,999, the commission will be 4% of your transaction
- For assets of more than $50,000 — the commission will be 3% of the transaction amount.
- And finally, the commission for selling stocks bought at IPO price is 0.5% of the transaction.
Make sure to read the T&Cs for your account to be clear on all of the exact charges you will incur.
No news, feature article or comment should be seen as a personal recommendation to invest. Prior to making any decision to invest, you should ensure that you are familiar with the risks associated with a particular plan. If you are at all unsure of the suitability of a particular product, both in respect of its objectives and its risk profile, you should seek independent financial advice.
Investments in securities and other financial instruments always involve the risk of loss of capital.
Investment in IPO may involve additional restrictions. The forecast or past performance is no guarantee of future results.