Friday, January 28, 2022

BuzzFeed stock soars then crashes during his public debut

BuzzFeed began trading the stock market on Monday, a big move that could help the company expand and chart a path for other emerging digital media companies looking to go public as well.

But his debut was far from smooth.

Stocks traded under the symbol ‘BZFD’ fell after an initial jump of about 50%. It was trading at about $ 8.56 when markets closed on Monday after the day opened at $ 9.67.

The shaky start came after BuzzFeed raised much less money than expected from a deal that put it on the stock market. BuzzFeed has teamed up with a dedicated acquisition company, a deal that could raise over $ 250 million. But the company said last week that it received just $ 16 million after a large number of shareholders refused to participate in the merger, allowing them to get back the money they had invested in the acquirer.

“I don’t care how we go public,” BuzzFeed CEO John Peretti said Friday. “Once we saw that we got through this market – even though the market was cold – it was just a means of going to market.”

The BuzzFeed business grew as it pioneered new, memorable ways – including lists and quizzes – to attract readers, and its news division won its first Pulitzer Prize this year.

As a listed company, BuzzFeed plans to buy competitors in an industry where scale is critical. As part of its deal with the acquisition company, BuzzFeed announced the purchase of sports and entertainment publisher Complex, adding to its purchase of HuffPost last year.

Executives at other digital media companies are following BuzzFeed’s debut closely. Many of these ventures, which have been funded by venture capital firms and established media companies over the past decade, have faced an increasingly tough advertising climate and are looking for ways to get their early investors back.

“The fact that BuzzFeed goes public is a significant milestone for the industry,” Brian Goldberg, CEO of Bustle Digital Group, said Monday. “But the first hour of trading was not just a pleasant surprise, it was a spit out coffee surprise.”

Goldberg, warning that he was speaking early on the first day of trading, said BuzzFeed’s debut set “a truly impressive tone for an industry that many of us have considered undervalued for years.”

Bustle Digital Group plans to go public next year, Goldberg said. The company that publishes the women’s website Bustle has been acquiring other outlets in recent years, including Gawker and Mic.

Other digital media companies are considering using public channels through acquisition companies. Group Nine Media, which publishes PopSugar and Thrillist, formed its own SPAC in December 2020, announcing in a securities filing at the time that it intends to merge with similar companies.

Online shopping is a key part of BuzzFeed’s growth plan, which has a shopping site that sells products directly to consumers. Because many of his competitors are hosting content on a pay-per-view basis, Peretti said it is possible to “become the place where you can reach the general public.” He sees other opportunities to accelerate BuzzFeed’s growth, including through streaming video shows.

While BuzzFeed did not raise as much money from the SPAC merger as expected, it borrowed $ 150 million by selling convertible bonds – corporate bonds that can be exchanged for stocks in the future at a specified price.

In the first half of 2021, BuzzFeed had revenue of $ 162 million, up from $ 123 million in the same period a year earlier. The company lost $ 12 million in the first six months of this year, slightly more than the $ 19 million it lost in the same period a year earlier.

Nation World News Desk
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