How to Invest in Telegram

Telegram is a cloud-based messaging app that recently hit 900 million monthly active users and is one of the 10 most downloaded apps in the world, but it's not yet possible for most of us to buy Telegram stock. Telegram is not publicly traded, but founder and CEO Pavel Durov recently said that the company is weighing an initial public offering (IPO).

Based in Dubai, Telegram allows you to create group chats for as many as 200,000 users and also has channels that let you broadcast to an audience. Its Secret Chat mode, which offers end-to-end encryption, has become popular with people seeking maximum privacy.

Telegram isn't profitable yet and has largely been financed by Durov, a Russian-born entrepreneur. However, Durov has outlined a path to profitability that includes "minimalist, privacy-conscious advertisements" for public channels and a premium subscription model.

As Telegram surges in popularity, it's been criticized as a propaganda tool for terror groups and organizations that promote hate speech. The anonymity it provides has also made it a hotbed of illegal activity.

In this article, you'll learn the latest about a potential Telegram IPO. We'll cover whether Telegram is profitable, the pros and cons of investing in the company if it goes public, and some alternatives to buying Telegram stock.

Is it publicly traded?

Is Telegram publicly traded?

No, Telegram isn't publicly traded, so it's not possible for most people to buy Telegram stock. If you're an accredited investor, you may be able to buy shares of Telegram and other pre-IPO stocks through a platform like EquityZen or Forge Global. But if you're hoping to invest in Telegram stock using a regular brokerage account, you'll need to wait for the company to hold its IPO.

When will it IPO?

When will Telegram IPO?

As of this writing, Telegram hasn't filed to go public, so it's not on the IPO calendar just yet. However, during a rare interview in March 2024, Durov told the Financial Times that the company could eventually IPO, although he wouldn't provide a timeline.

Durov, the sole owner of Telegram, said in the interview that platform has received valuations north of $30 billion from potential investors, although he's ruled out selling the company as it eyes an IPO.

"Generally speaking, we see value in [an IPO] as a means to democratise access to Telegram's value," Durov said.

Telegram has raised more than $2 billion through debt financing in the last three years, including $330 million worth of bonds issued in March. Durov wrote in a post that the latest issuance ensures that Telegram "can keep expanding at an accelerated speed."

Durov told the Financial Times that if the company goes public, it would consider allocating shares to loyal users, as Reddit (RDDT 4.22%) did earlier this year when it made its stock market debut.

How to invest

How to buy Telegram stock

For now, access to Telegram stock is off-limits for most investors. But if the company makes its much-anticipated IPO, you'll be able to invest in the company using your brokerage account. To start investing in stocks, follow these four steps:

1. Open a brokerage account. The first step is to open and fund a brokerage account, which you can do online in just a few minutes. You'll need to be at least 18 and provide some basic information, like your name and Social Security number.
2. Figure out your budget: Next, you'll need to decide how much you want to invest. It's essential to have a diversified portfolio, so a good approach is to invest mostly in S&P 500 index funds or another fund that tracks the overall stock market. Then you can allocate a small part of your investing budget to individual stocks like Telegram, assuming it eventually goes public.
3. Do your homework: It's essential to do research before you buy shares of a company. Make sure you know whether the company is profitable, how it earns money, its competitors, and its competitive advantages.

Since Telegram stock isn't publicly traded at this point, here are three alternative stocks to consider:

Meta

Meta Platforms (META 1.41%) is best-known as the owner of social media giants Facebook and Instagram. But in 2014, founder Mark Zuckerberg also paid $19 billion to acquire WhatsApp. Unlike Telegram, messages on WhatsApp feature end-to-end encryption by default, although WhatsApp has been criticized for sharing user data with Facebook. With more than 2 billion monthly active users, WhatsApp is by far the more popular messaging app.

Reddit

If you're enthusiastic about Telegram for its ability to facilitate anonymous conversation, consider investing in Reddit. Reddit has become a hugely popular social media site in recent years, but unlike other platforms, users don't share their names or identities when they sign up for the service. Reddit recently went public in one of the most-hyped IPOs so far in 2024.

New York Times

The New York Times (NYT 0.54%) is a legacy media publisher that has embraced Telegram as a broadcasting platform. It initially launched its channel to provide reporting on the Russia-Ukraine conflict but has since expanded to include a daily international news roundup. Its channel had more than 140,000 subscribers as of mid-April.

1. Place your order: After you've opened and funded your account, made a budget, and done your due diligence, it's time to place your order. You'll need to enter the stock's ticker, specify how many shares you're buying, and tell your broker whether you're placing a market order or limit order. Then, you'll hit "place your order" to complete the transaction.

Should I invest?

Should I invest in Telegram?

It's premature to say whether you should invest in Telegram, given that the company hasn't officially announced its IPO. But if the company files to go public, here are some situations where you should consider the stock:

• You already have a well-diversified portfolio and want to increase your exposure to social media or communications stocks.
• You're familiar with the risks of investing in IPO stocks and can stomach short-term volatility.
• You believe Telegram can deliver market-beating returns in the long term.
• You use Telegram and believe it's a better platform than its competitors, like WhatsApp.
• You believe the platform's popularity in emerging markets, like India, will allow it to grow its user base in the long term.
• You believe Telegram can eventually become profitable through advertising and premium subscriptions.

Avoid investing in Telegram if:

• You have qualms about its use in spreading propaganda and facilitating criminal activity.
• You believe the platform is vulnerable to cybersecurity threats.
• You're seeking a quick profit.
• You're an income investor since young, growth-oriented companies rarely pay dividends.

Profitability

Is Telegram profitable?

Telegram isn't yet profitable, but Durov told the Financial Times in March that he believes the company can become profitable in 2024 or 2025. He also said that the company is earning "hundreds of millions of dollars in revenues."

Durov's plan to make the company profitable hinges on revenue from sponsored messages in public channels and a premium subscription model. However, Durov has vowed not to include sponsored messages in private chats. He has also promised that Telegram's services will remain free, although the premium subscription unlocks features like 4 GB file uploads and faster download speeds.

ETFs

ETFs with exposure to Telegram

Investing in exchange-traded funds (ETFs) is a good way to diversify in your portfolio. You can choose funds that track the broader stock market or focus on specific industries or themes with less risk than you'd get when you buy individual stocks.

Since Telegram isn't publicly traded, there are no ETFs that offer exposure to the company. However, here are three ETFs that could allow you to capitalize on similar themes.

• Vanguard Communications Services ETF (VOX 1.44%): The ETF tracks an index of stocks in the U.S. communications sector, including companies that provide telephone, data transmission, cellular, and wireless communication services, along with various media companies. It has 116 holdings, the largest of which are Meta, Google parent company Alphabet (GOOGL 1.81%) (GOOG 1.75%), Walt Disney Co. (DIS -0.11%), Comcast (CMCSA 0.63%), and Netflix (NFLX -0.45%). The ETF's expense ratio is 0.10%, which means you'd pay $1 in fees on a $1,000 investment.
• Global X Social Media ETF (NYSEMKT:SOCL): If you're interested in social media companies not just in the U.S. but throughout the globe, check out the Global X Social Media ETF. The fund consists of 45 companies involved in social networking, file sharing, and other web-based media applications. Its top holdings are Meta, Chinese technology conglomerate Tencent Holdings Inc. (TCEHY 1.05%), Pinterest (PINS 22.21%), South Korean search engine giant Naver (NHNC.F -1.75%), and Chinese video-sharing and social media company Kuaishou Technology. The fund's expense ratio is a bit higher, at 0.65%, which means you'd pay $6.50 in fees on a $1,000 investment.
• Renaissance Capital IPO ETF (IPO -0.56%): If you're seeking exposure to IPO stocks in general, you can invest in the Renaissance Capital IPO ETF. The ETF invests exclusively in companies that have gone public in the past three years. The fund's top five holdings are cryptocurrency exchange Coinbase (COIN -0.38%), Johnson & Johnson (JNJ 4.25%) spinoff Kenvue (KVUE -0.24%), Brazilian fintech company Nu Holdings Ltd. (NU -1.93%), app monetization platform AppLovin (APP 0.06%), and British semiconductor and software development company Arm Holdings (ARM -3.72%). The ETF's expense ratio is 0.60%, which means you'd pay $6 in fees on a $1,000 investment.

Related investing topics

The bottom line on Telegram

If Telegram goes public, investing in the stock will be a high-risk, high-reward proposition. The platform has a rapidly growing user base, particularly in the developing world. But it's also increasingly associated with propaganda and illegal activities, which makes it risky.

IPO stocks are often volatile, especially immediately after debuting on the stock market. A good rule of thumb is to focus your investment money on established stocks and funds and only invest in IPOs with funds you can afford to lose.

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