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Source: Dmitriy Rybin, Shutterstock
Summary
- This is not the first time when Microsoft and Discord's names have surfaced together. Both the companies have pre-existing ties.
- Microsoft is making constant efforts to increase its presence in the social media industry.
- The company tried to acquire TikTok's US assets but the deal had failed to materialize.
In an attempt to grab hold of the competitive social media market, Microsoft Corporation (NASDAQ: MSFT, MSFT: US) will likely buy Discord Inc, which is a communications and chat platform on which people can play games, organize discussions and virtual parties.
The deal will reportedly be worth US$ 10 billion. Last year in December, Discord had raised a whopping US$ 100 million when its market value was US$ 7 billion. Since its inception in 2015, Discord rose to prominence soon and at the moment it has over 140 million monthly active users. In 2020 its revenue spiked to US$ 130 million.
Source: Pixabay
Why Microsoft might be interested in buying Discord?
This is not the first time when Microsoft and Discord's names have surfaced together. Both the companies have pre-existing ties. In 2018, Microsoft had announced to provide Discord support to its users of Xbox Live users for better communications and connectivity among gaming friends.
COVID-19 pandemic brought a boom in the gaming industry and the Xbox maker may be interested in boosting the prospects of its video game offerings. Last year, the company acquired ZeniMax media for US$ 7.5 billion. All this indicates that the company might be interested in gaining revenues from the social media and gaming industry.
Currently, rival companies like Facebook, Google, Amazon and Apple are under antitrust investigation, making it an ideal time for Microsoft to seal the deal.
With millions of monthly active users, Microsoft will get a good opportunity for marketing and cross-promotion of its products and services.
The company is making constant efforts to increase its presence in the social media industry. In 2016, Microsoft had acquired LinkedIn, highly popular among working professionals, for US$ 26.3 billion. It also tried to acquire TikTok's US assets but the deal had failed to materialize.
A look at the company's financials
The tech-giant's stocks grew almost 72 per cent in a year and 8.4 per cent year-to-date. It has a market cap of US$ 1779 billion and offers a 42.7 per cent return on equity.
In January, the company released financial reports for the second quarter. The company achieved revenue of US$ 43.1 billion in Q2 2021, up by 17 per cent in Q2 2020. For the same period, the net income was US$ 15.5 billion, an increase of 33 per cent from Q2 2020.
