Yahoo Finance's Dan Howley joins the Live show to discuss communications platform Discord looking to go public.

Video Transcript

BRIAN CHEUNG: Communications platform Discord reportedly looking to hit the Street through a direct listing. Obviously, this is a platform that's very popular with gamers, so let's bring in Yahoo Finance's Dan Howley, who's got the update on this. And Dan, this is a company that notably didn't want to shake hands with Microsoft after they made a $12 billion offer last year. So is this them trying to lick their wounds, or do they actually see the opportunity to make even more money here?

DAN HOWLEY: Yeah, it looks like they're trying to make more money. According to reports, they're looking to go public with a valuation of about $15 billion. That's obviously $3 billion more than the $12 billion that Microsoft had offered for the company last year. And just to give you a background on what Discord really is, is, it's a chat-based app that also has voice chat capabilities.

So, you know, I frequently use it to play video games with my friends and just talk to them. But a lot of people actually use it as a means for social connection. So they'll get into Discord channels and chat about things like their favorite bands or their favorite shows or what movies they watched recently, so things along those lines. And that's really kind of where Discord has started to take off more and more.

Now, to give you an understanding of how much they or what they make money from, you can use the app for free either on your PC or your tablet or phone. They make money through subscriptions. They call them their Nitro subscriptions. And basically, they give you smaller upgrades to the overall service. So it's not something that really blows you away, but it does give you things like interesting avatars and some capabilities that might not be available for free users.

So they do charge a monthly subscription there and that's really where they make the bulk of their money. So you can imagine that they would be pushing that a little bit harder going forward if they do go public. Now I do want to point out that they had, as of last year, about 150 million users per month. And they were making more than $100 million in revenue in 2020. So certainly nothing to sneeze at, but as I said, this is a company that originally was really meant for voice chat, for gaming, some text chat-- obviously, that's in there. And it's expanded well beyond that. So you can imagine that it's going to continue to do that into other areas as well.

BRIAN CHEUNG: Well, Dan, it's important to note, though, that Discord is not the only name on the Street. I mean, if you and I, for example, were playing "Pokemon Arceus" on the Nintendo Switch 1 to connect with each other, we don't just have to use Discord, right? What other competitors are in the space?

DAN HOWLEY: Yeah, I mean, really, there's a slew of competitors. It's not that Discord is necessarily unique on its own. Think of something like a Slack or Microsoft Teams, Google Hangouts, or Google Chat, whatever they're calling it nowadays. They just constantly change that name. But these are apps that are available that offer the same kind of capabilities. I think really, for Discord, it's that ability to join large rooms and talk to people. We've seen other companies try to pick up on this trend. Twitter, obviously, was doing that as well.

And there's a number of different other apps that are trying to ape this model, but aren't necessarily doing it as well or as popularly as Discord. And I think a lot of that has to do with the gaming aspect of it and seeing that kind of stem out to the different areas that it's putting itself towards, like I said, like those large communities where people kind of join up and talk about things like movies and music and sports. So I do think that Discord is going to continue to be the number one spot for a while for this kind of capability. But we can jump on Slack and talk about Pokemon if you want.

BRIAN CHEUNG: Did you play it yet, the new "Arceus"?

DAN HOWLEY: I have. I've been playing it. I have.

BRIAN CHEUNG: It's sick. It's the graphics--

DAN HOWLEY: I know.

BRIAN CHEUNG: --thing. The graphics thing, it's really-- all right, well, I'll see I'll see you in the Slack or the Clubhouse or the Discord, what have you. Yahoo Finance's Dan Howley, thanks so much.