Clubhouse has made a splash in the last few weeks. The company hit $100 million valuation in May, when it had about 1,500 users.
Now, it's 10 times what it was in the last funding round eight months ago, pushing a $1 billion valuation after its latest Series B round.
Amid the social media buzz, Sahil Lavingia, CEO of Gumroad, tweeted last week that Clubhouse could break $100 billion in the next five years. Other influencers followed with similar projections.
Now, stock traders are wondering how they can get ahold of some Clubhouse stock.
Be warned: Clubhouse is not a public stock.
There is a different company called Clubhouse Media Group Inc. (OTCMKTS: CMGR) that trades over the counter. Many traders have mistakenly flocked there, thinking it’s the social media app company.
The stock popped more than 500% from $4 to $27.40. It’s on its way back down now. But, for the future, if you see a publicly traded “Clubhouse” trading under the ticker CMGR, that’s not the one.
Of course, there is no doubt about whether a future Clubhouse IPO will be a media bombshell. This company could revolutionize the social media world into the next decade.
But what is so special about Clubhouse? What separates it from other social media apps?
Here's why everyone is looking forward to buying Clubhouse stock...
What Is Clubhouse?
Clubhouse is a new take on the chatroom launched in 2020 by Alpha Exploration Co. People can drop in and have live, moderated voice conversations that are never recorded.
It's a similar charm to the Snap Inc. (NYSE: SNAP) model, which enables users to share photographs that disappear after they are viewed. However, Clubhouse serves a slightly more communal purpose.
Influencers have taken to the app to start their own rooms, where they rub shoulders with other users, share advice, or plan businesses. Unlike Zoom or a normal audio call, its format creates a live, un-recorded networking opportunity, much closer to a real happy hour or gala.
The company aims to deliver a voice-based social media product enabling people to "tell stories, develop ideas, deepen friendships and meet interesting people."
It was founded in April 2020, about the perfect time for a service of its kind. April was peak lockdown as well as around when the S&P 500 hit its trough.
Clubhouse users can bounce room to room for different subjects, either to listen or even add their two cents. Vogue called it a mix between "live podcast-style conversations, panel discussions, networking opportunities, and advantageous multiple-room use."
Of course, users also have the option to host private rooms as well.
Right now, the app is invitation-only. So big celebrities like Drake and Oprah have been using it, along with online influencers like Gary Vaynerchuk.
Still, the app is allowing iPhone users to reserve usernames.
The "invite-only" beta period is allowing Clubhouse to build a foundation of influencers that can host chats and create demand for more participation.
Once it's available, influencers can open rooms for their entire fanbases and essentially become "moderators," similar to creating a Discord or Slack group. The main difference here would be the voice-based conversation, versus typing out text.
While the central rule of Clubhouse is that conversations are not recorded, allowing the experience to mimic real-life interactions more closely, that is not without its problems.
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Early Controversy for Clubhouse
One thing that could stand in the way of success for Clubhouse is content moderation. Companies founded on the idea of fluid, unmoderated discussion have been under the gun in the last year.
Twitter Inc. (NYSE: TWTR) just released a "Birdwatch" feature in the wake of a bitter debate over social media misinformation and how it affects elections. Companies don't want to end up like Parler, the alternative to Twitter that is now under an FBI probe for its hands-off approach to moderation.
Now, Clubhouse has also seen complaints about what some perceive as the company's silence on these matters.
Last year, The Verge reported that Clubhouse "did not seem to have a plan" in that regard, after several people had reported verbal harassment. Clubhouse replied saying it had all the stops in place to investigate and respond to abuse on the platform.
We will just have to wait and see how that plays out.
If a social media company like Clubhouse can find a way to provide open dialogue without liability, it would be hopeful for social media overall.
Here's what it means for Clubhouse stock.
Should I Buy Clubhouse Stock After the IPO?
This could be dismissed as a crazy "fad" like MySpace, or it could be a staple in the tech world, like Facebook Inc. (NYSE: FB). Facebook doesn't seem to disappear no matter how many people want it to.
The latter is more likely. Even if we get back to normal after a COVID-19 vaccine, demand for a tool like this will not simply disappear.
It could be a while before Clubhouse, the social media stock, is publicly traded. It still has not posted any revenue. But its business model could be a robust addition to the communications tech market, especially with new remote businesses springing up from garages and bedrooms everywhere.
This is an extremely fast-growing company, having acquired 600,000 registered users. It is still in a beta phase.
One thing to note: If you search "Clubhouse stock" online, don't get too excited when you see it pop up. There is another publicly traded company called Clubhouse that trades under the ticker CMGR. The company is also in the tech industry, a software producer. This not to be confused with the Clubhouse we are covering today.
We don't know when a Clubhouse IPO will happen, but it will make waves. Stay tuned for more information until then. Meanwhile, you have plenty of already public stocks to watch now...
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