Microsoft Said To Be In Discussions To Acquire Discord For Over $10B

Microsoft Corp. MSFT is in talks to acquire Discord Inc. for more than $10 billion, Bloomberg reported Monday, citing people familiar with the matter.

What Happened: Discord, a communications and chat platform, has reached out to potential buyers including Microsoft, but no deal is imminent, according to the report. However, one person told Bloomberg that Discord is more likely to go public than sell itself.

It was reported in December that Discord touched a $7 billion enterprise valuation after its latest funding round.

Reddit-Fueled GameStop Surge: Discord was in the news in late January when Tesla Inc. TSLA CEO Elon Musk expressed his disappointment with the company for taking down WallStreetBets from its platform. Discord said at that time the action did not have any relation to the community’s role in the surge of GameStop Corp.’s GME stock at that time.

Shares of GameStop, BlackBerry Ltd. BB, Nokia Corp. NOK, AMC Entertainment Holdings Inc. AMC and other stocks seeing the short-squeeze interest of the Reddit community tanked after Discord’s action.

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Why It Matters: Discord is a communications platform — with VoIP, instant messaging, and digital distribution capabilities — that connects game studios and publishers with their communities. Gamers primarily use Discord, and its rise coincided with the exploding popularity of online multiplayer games like Epic Games' "Fortnite."

Discord benefited from the social distancing and remote work culture during the pandemic-induced lockdown. The app's downloads grew to about 800,000 a day while its user base peaked at over 140 million monthly active users last year, which is approximate 2 times the number of monthly active users in 2019.

Xbox has been a hit for Microsoft, and the company now has a gaming division worth billions of dollars annually. The acquisition of Discord will further give a boost to Microsoft’s gaming business.

Price Action: Microsoft shares closed about 2.5% higher on Monday at $235.99.

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Photo by Chris Messina on Flickr