decrypt.co
Reddit sold the majority of its cryptocurrency portfolio during the third quarter, offloading Bitcoin and Ethereum once held “for treasury purposes,” according to a Tuesday filing with the Securities and Exchange Commission (SEC).
When the social media company filed for an initial public offering in February, the company held an “immaterial” amount of crypto on its balance sheet, purchasing digital assets using excess cash. On Tuesday, Reddit used the same language to describe proceeds from the recent sale.
“We sold the majority of our cryptocurrency portfolio, which consisted primarily of Bitcoin and Ether,” Reddit stated. “The net carrying value of our cryptocurrencies, as well as the gain recognized on sale, was immaterial.”
While the amount of cryptocurrency sold remains unknown, the timeframe—with the sale taking place during the quarter ending September 30—means that Reddit missed on the latest gains seen by Bitcoin, the biggest cryptocurrency on the market.
On Tuesday, Bitcoin came $175 away from its all-time high price of $73,737 set back in March, reaching a monthly high of $73,562 during a month known by traders as "Uptober" for its historical crypto gains. Between July and September, during which Reddit sold its assets, the price of Bitcoin ranged between approximately $54,000 and $68,000.
Although the company has turned away from Bitcoin and Ethereum for bolstering its balance sheet, Reddit signaled that it still holds some crypto. That includes Ethereum and Polygon derived from the sale of virtual avatars, which exist on the Ethereum scaling network. Reddit said that it holds MATIC, though Polygon recently began the process of migrating its token to a new one called POL.
Among social media giants, Reddit was an early pioneer, experimenting with digital assets as a way to offer collectibles and reward user engagement. Though the company signaled that its product and engineering teams are still engaged with crypto tech to some degree, it also noted that the future of digital assets is riddled with questions.
“While we believe cryptocurrencies and blockchain technology have significant potential, the popularity and prevalence of cryptocurrencies is a relatively recent trend, and whether cryptocurrencies and blockchain technology will continue to be adopted by consumers and businesses in the long term is uncertain,” Reddit said.
Reddit stock price was up 41% Wednesday, hitting $116 per share, as of this writing. Surpassing analysts’ expectations, Reddit turned profitable, reporting $30 million in net income compared to a loss of $7.4 million for the same quarter a year ago.
When asked about the dollar value of its crypto portfolio, or what constitutes an “immaterial” amount, Reddit did not immediately respond to a request for comment from Decrypt.
The social media company has distanced itself from several of its crypto-related projects after diving headfirst into the space in 2020. Moons, once the crypto token of Reddit's r/cryptocurrency community, became a community-led project after Reddit "officially renounced" control of the token’s associated smart contracts last November.
In July, the company moved further away from the digital asserts space when it sunset its so-called Collectible Expressions feature, which showed animations based on a users’ Collectible Avatars NFTs minted on Polygon. Following their launch in 2022, Collectible Avatars were an early hit, selling sometimes for thousands of dollars on secondary markets.
Reddit has released multiple waves of Collectible Avatars, with over 18 million minted as of July 2023. On occasion, the social media firm leveraged them as a way to promote events—selling them as a way to engage fans for the upcoming NFL season last year, for example.
Under Reddit’s investment policy, the company said any future investments in crypto will have to be approved by its board of directors. Additionally, allocations would be limited to Bitcoin and Ethereum, or any other cryptocurrency identified as “likely not being a security.”
To this day, Reddit’s mobile app features a cryptocurrency wallet. Dubbed Vault, the company initially described its product as part of a vision for a “new frontier.” Moving forward, however, it appears that Reddit is putting up a border around its balance sheet.
Edited by Andrew Hayward