Last year, investors and the general public began hearing about a new app called Clubhouse. Much of the excitement around this app was created after Tesla CEO Elon Musk
hosted an interview on it.
Thanks to Musk’s generally positive comments about Clubhouse and his prominent use of it, the app’s popularity exploded. As often happens to anything surrounding Musk, investors also began looking for ways to capitalize on the attention he brought to the (at-the-time) relatively obscure platform.
Since then, many people have wondered what Clubhouse is, who owns it and whether they can buy stock in it. Here’s what you need to know about Clubhouse, its current stock situation and whether an IPO is on the way.
What Is Clubhouse?
Clubhouse is an
audio-based social media app. On it, users can join rooms and listen to speakers who discuss a wide range of different topics.
One of Clubhouse’s unique features is the fact that it has no text or video capabilities of any kind. This places the focus on vocal conversations, something that most other social networking apps largely ignore.
Is Clubhouse Publicly Traded?
At the moment, Clubhouse does not trade publicly and shares cannot be purchased by general retail investors. Due to the app’s popularity, however, many investors have tried to find ways to build exposure to Clubhouse into their portfolios.
So far,
the most popular tactic for profiting from Clubhouse has been to invest in shares of Agora (NASDAQ:API) This Chinese software company provided some of the core technology that powers the Clubhouse app. As a result, investors reasoned that Clubhouse’s massive success last year could drive Agora shares higher.
Unfortunately, those who invested in Agora at the height of the Clubhouse craze have seen their shares perform very poorly so far.
The 52-week range for Agora shares is extremely broad, ranging from $13.67 to $114.96. As of the time of this writing, Agora trades under $15 per share.
Traders who opened positions when the stock was being propelled by the hype surrounding Clubhouse have lost almost a substantial portion of their equity in the interim.
Is Clubhouse Listed on NASDAQ?
At the moment, Clubhouse does not list on NASDAQ or any other stock exchange.
Who Is Clubhouse Owned By?
Clubhouse was created by two relatively unknown co-founders,
Rohan Seth and Paul Davison. The app is technically owned by a parent company started by the two, Alpha Exploration Co.
The story of Clubhouse’s ownership, however, doesn’t end with Seth and Davison. Across multiple private funding rounds, the company has sold off interest to a number of venture capitalists.
One of the most prominent VC firms associated with Clubhouse is Andreessen Horowitz, which took a major role in an April 2021 funding round rumored to value Clubhouse at around $4 billion.
These extremely high valuations came at a time when Clubhouse didn’t even have a permanent website set up, reflecting the sheer interest venture capitalists were taking in the app at the time.
Clubhouse vs. Clubhouse Media: What’s the Difference?
Despite some confusion between the two,
Clubhouse Media (OTCMKTS:CMGR) and the Clubhouse social media company are two completely different entities.
Clubhouse Media runs houses for online content creators and influencers. While it does have exposure to the social media market through that business, the company is in no way affiliated with the Clubhouse app.
Unfortunately, this led to considerable investor confusion early in 2021.
Following the spike in popularity of the Clubhouse app, investors attempting to buy equity in the company began accidentally purchasing shares of Clubhouse Media.
This caused the share price of Clubhouse Media to spike. The stock briefly traded at over $28 per share, but rapidly plunged when investors realized the mistake. Today, Clubhouse Media
trades at just $0.13.
When Will Clubhouse IPO?
As for the Clubhouse app itself, there’s no immediately available IPO date. With that said, there are some tantalizing pieces of evidence that suggest that the platform could have a public offering at some point. The interest of venture capitalists in Clubhouse, for example, shows that the company has strong potential as an investment.
The funding rounds Clubhouse has gone through could also be early glimpses that an IPO is on the horizon. While interest has cooled since 2021, there’s clearly demand for Clubhouse to grow and become a larger part of the social media ecosystem. The need for more capital could push Clubhouse in the direction of a public stock offering.
Overall, though, any potential IPO is likely quite a way off. No formal announcement has been made, and the company appears to still be in its relatively early stages. Though an IPO is reasonably likely at some point, don’t expect to be able to buy Clubhouse stock anytime in the immediate future.
The first sign that an IPO is on the horizon is when an S-1 is filed for the parent firm of Clubhouse.
Would Clubhouse Be a Good Buy After an IPO?
Because the company’s financial reports aren’t public, it’s virtually impossible to say how good an investment Clubhouse would be after a potential IPO. Judging strictly by the surges in both Agora and Clubhouse Media early in 2021, though, it is very clear that the market would be eager to bid up the price of Clubhouse following a potential IPO.
In that event, it’s likely that Clubhouse would become a prominent high-growth tech stock. Other social media companies, such as Meta Platforms and Twitter, have proven popular with investors.
If Clubhouse’s unique approach to social networking allowed it to stand out from the pack, there’s a good chance that it could produce large growth numbers and potentially be a good investment.
While Clubhouse certainly has potential, it’s also an example of irrational exuberance leading to poor investment decisions. Investors who purchased shares of the unrelated Clubhouse Media or drove the price of Agora far beyond its reasonable limits ultimately lost money and missed out on better opportunities.
While trendy stocks can produce large short-term gains, the Clubhouse story clearly shows why investors must perform due diligence before purchasing any asset.
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