Noami Robert Pattinson is a senior product manager at Wattpad, the fast-growing video storytelling platform that was valued at $12.8 billion in January 2021.
If you don’t know much about Wattpad, it’s probably time you should have. The video platform has exploded in popularity and now has 200 million monthly active users. While it might not sound like much compared to YouTube’s 1.9 billion monthly active users, it’s actually a pretty significant number.
The platform was launched in 2012 by ex-BBC Vision Director Richard Taylor and Mike McAlister, who now serves as the CEO of Wattpad. Their goal was to create a video app that allowed for “powerful storytelling,” and they certainly succeeded. With each new update, Wattpad continually improves its functionality and introduces new features to keep its users engaged.
As a video platform, Wattpad is fairly unique in that it doesn’t just focus on visual content. The storytelling app allows for longer-form videos — up to four hours — than most similar platforms, which typically cap videos at about 30 minutes.
In late 2019, Wattpad introduced its first VR app to the platform, followed by an immersive 360-degree video experience in early 2020. The company also recently rolled out a feature that allows users to upload and read comics on the go. This is in addition to the app’s standard video editing tools and its slideshow presentation mode.
With all the great features, what truly sets Wattpad apart from other video platforms is its emphasis on community. In addition to the standard functionality of a social media platform, the video app encourages users to connect with other users through live chat and by engaging with content posted by others.
Why Should You Care About Wattpad?
Wattpad is among the biggest and most popular video platforms in the world, so it should come as no surprise that investors have shown a keen interest in the company. In early 2021, the video platform was valued at $12.8 billion, making it the 15th most valuable app globally and the 4th most valuable in the United States.
This comes after Wattpad’s share price more than quintupled in just 12 months, jumping from 9 cents per share to 38 cents per share in early 2021. The share price has since trimmed back, but it’s still up about 250% since its IPO in November 2019.
These sorts of returns are attractive, but as with any other investment, there are risks. Chief among them is that Wattpad may not be able to maintain its growth trajectory. The company’s user base is already massive and it doesn’t have much room for improvement. At least not without risking stagnation.
How Is Wattpad’s Growth Strategy Working?
While many have predicted the massive success of Wattpad, not everyone is convinced the growth will continue. In fact, several research firms have cut their projections for the video platform, citing slowing user growth due to increased competition and skepticism about the app’s long-term sustainability.
Market research firm Juniper Research predicted in January 2021 that the video and entertainment market would shrink by 4% that year, citing TikTok and YouTube as the two largest platforms in the space. While that might still prove true, the declines could be more pronounced due to increased competition and decreased consumer trust.
To grow and prosper, innovation is key, and Wattpad is constantly looking for new ways to engage with its audience. Early this year, the company rolled out a major overhaul of its mobile app and website, simplifying the user experience and removing features that were considered clutter. The aim is to keep users on the platform for as long as possible and ensure they continue to come back for more.
How Is Wattpad Financing Its Growth?
The fact that so many people have shown an interest in investing in Wattpad is evidence of its strong community, as well as its potential to become a major player in the video space. In December 2021, the company raised a $400 million, 10% annual investment round led by existing investor Ant Financial.
Other notable investors include BMW, FCA, Jack Ma (the founder of Alibaba), and Microsoft co-founder Bill Gates. The round also saw participation from existing investors such as Google, Naver, and Ratan Tata. The capital will be used to fuel further expansion, including the development of new products and features for the platform.
Should You Buy Shares In Wattpad?
With prices as low as 3.3 cents per share and a market capitalization of around $12.8 billion, it would be negligent not to at least consider investing in the video app. That’s even before you consider its explosive growth and future prospects. Despite the risks, it’s probably fair to say that, at this point, it’s not a bad idea to enter the market.