Fervour over audio-focused social media start-up Clubhouse has sent shares of Chinese-founded company Agora soaring after news started circulating online that it was providing critical back-end communication services to the hottest new social app in Silicon Valley since Snapchat.
Investors piled into Agora on Monday, pushing the stock up to US$73.60, a 30 per cent jump over the closing price on Friday. The jump came the same day Tesla and SpaceX CEO Elon Musk joined Clubhouse and quickly hit the platform’s limit of 5,000 concurrent listeners in his room, where he hosted a conversation with Vlad Tenev, CEO of online brokerage Robinhood.
Clubhouse has been drumming up a lot of excitement in Silicon Valley. The invite-only, social audio app allows users to easily organise virtual talk shows in chat rooms.
Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.
Since launching on iPhone in April 2020, the app has built a following among venture capitalists and tech company founders. The company recently raised US$100 million in funding led by Andreessen Horowitz, putting the start-up’s valuation at US$1 billion.
The hype around Agora, which went public on the Nasdaq last June and has headquarters in both Shanghai and Silicon Valley, started when news got out that it was the platform powering Clubhouse’s audio features.
Similar to the San Francisco-based company Twilio, Agora aims to make it easy to deploy real-time audio communication in apps and websites using APIs.
Neither Clubhouse nor Agora have confirmed the relationship, and Agora declined to comment for this story. However, a person familiar with the matter confirmed to the Post that Clubhouse uses Agora. Industry insiders have also said publicly that the hot new social platform was built using the Chinese company’s services.
Knowledge of the relationship is not new. Angel investor Justin Caldbeck claimed on Twitter last summer that Clubhouse was built in a week using Agora. Saga Partners investor Richard Chu repeated the claim in his newsletter when he said he was investing in the company.
Broader awareness started picking up online last week, when it got a mention on the Reddit forum WallStreetBets, the forum that helped spark the recent GameStop stock frenzy.
Agora was started in 2014 by co-founders Tony Wang and Tony Zhao, who was previously the chief technology officer for Chinese live-streaming giant YY. By providing services to a number of big tech companies in China, including YY, Xiaomi and Douyu, the company became one of the biggest players in the market.
In 2020, with many people stuck at home during the Covid-19 pandemic, demand for real-time communication services skyrocketed, especially in the education sector as remote learning boomed. Agora said its technology could enable partners in the education sector to host online classes with tens of thousands of students in a single session.
In the past five years, Agora has seen a 100-fold growth in usage among its audio service partners, rising to a monthly average of 40 billion minutes of live audio in 2020, Tencent News reported, citing an internal letter Zhao sent to employees.
Revenues have also been climbing. Agora sales rose nearly 50 per cent between 2018 and 2019, from US$43.7 million to US$64.4 million, according to the company’s prospectus.
Separate filings show the company brought in US$30.8 million in the third quarter, a year-on-year increase of 80 per cent. In an earnings call, the company said 80 per cent of its revenues came from China and that it had 1,815 active partners by the end of the same quarter.
Still riding high from the exuberance around Clubhouse, Agora started trading at US$80 on Tuesday, but closed down at US$74.87.
More from South China Morning Post:
This article Agora, the Chinese-founded company powering Clubhouse, sees stocks soar as investors try to cash in on Silicon Valley’s hottest social media platform first appeared on South China Morning Post