Jonah Peretti, founder and CEO of BuzzFeed, attends his company’s first public appearance outside of Nasdaq in Times Square in New York City, Dec. 3. 6, 2021.
Brendan McDiarmid | Reuters
Corporate stories have their ebbs and flows, ups and downs.
to this point, BuzzFeedThe company’s journey as a public company has been an endless pit. Co-founder and CEO Jonah Peretti may be running out of time to turn his company around.
The digital media company known for its checklists and tests in crisis mode. Its stock is down 95% since the company went public at $10 a share in December 2021. Shares closed Friday at roughly 54 cents, giving the company a market valuation of about $86 million.
If the company trades for 30 consecutive business days below the $1 mark, Nasdaq will send a notice of shortage to the company, giving it an additional 180 days to reach the higher $1 mark or risk being written off. BuzzFeed has traded for less than $1 for six straight days as of Friday’s close.
There are loopholes and conditions. BuzzFeed can perform a reverse stock split to artificially increase its share value and stay in compliance — a move last year the insurer implemented. hippopotamus After the average closing price was less than $1 during a consecutive 30-day trading period. Hippo continues to survive as a listed company.
Peretti’s plan is to get the shares back above $1 by convincing investors that he’s ready to run a more profitable company. That’s what prompted him to shut down BuzzFeed’s Pulitzer Prize-winning but money-losing newsroom last week and lay off 180 employees, or 15% of the company’s staff.
“I’m trying to set us up for a better future and keep us in line with the main trends,” Peretti said in an exclusive interview with CNBC. “If I do it well, my leadership will be successful. If I don’t, it won’t be.”
BuzzFeed reported a net loss of $201 million for 2022 (including a non-cash goodwill impairment charge of $102.3 million) after making a profit of $26 million in 2021. The company’s Investor Day is May 11th. Peretti will try to convince shareholders that his vision must be trusted.
He admitted that it was fair to question Peretti’s decision not to shut down BuzzFeed News earlier. CNBC reported in March last year that investors had asked him to shut it down.
However, he said he has no plans to step down as CEO or sell the company despite the company’s 95% loss in value.
“I would be more interested in my leadership if I didn’t see where the market was going,” he said.
Peretti hopes that incorporating more AI into company content will boost engagement and save costs for the company. In the past two months, BuzzFeed AI-powered quizzes have resulted in a 40% increase in how long a user has participated compared to human-generated quizzes, Peretti wrote on BuzzFeed’s blog Thursday.
“Formats developed before the AI revolution, and many of the media industry’s formats and conventions will need to be updated and adapted, or start to feel outdated and outdated,” Peretti wrote in the post. “This is why we are investing in AI-powered content and launching new formats like Infinity Quizzes and Chatbot Games.”
Some of Peretti’s predictions seem inconsequential when you think about what the next version of the Internet might entail. He wrote that he expects news homepages to resurface as social media companies like Facebook, TikTok and Twitter turn their backs on news for more public entertainment. That’s why he’s confident in the future of the HuffPost brand BuzzFeed, which rose in popularity during the mid-2000s with its creative headlines.
“In fact, on Monday of this week, HuffPost logged 16 million page views—a record since joining BuzzFeed, Inc.—a sign that prediction is indeed coming true,” Peretti wrote.
Peretti said he believes BuzzFeed can operate profitably by “covering trends, making shopping more fun, creating new interactive AI formats, and helping creators connect with our audience”.
This could also be wishful thinking if the digital audience has moved beyond old ways of using the internet and toward augmented reality and gaming, as BuzzFeed has no current strategy.
The dream exploded
BuzzFeed’s announcement in January that it would begin using artificial intelligence to help create quizzes gave BuzzFeed a brief surge in value, as shares jumped 120%.
But for the most part, BuzzFeed stocks have all been a ladder with no ladder.
BuzzFeed went public via a Special Purpose Acquisition Company, or SPAC, to great fanfare on Dec. 3. 6, 2021. For a moment that day, shares jumped from $10 to over $14. BuzzFeed’s valuation briefly rose above $1.5 billion — more than triple the amount Disney offered to buy it a decade ago, as shown in an excerpt from a new book by former BuzzFeed News editor-in-chief Ben Smith.
In those early hours of trading on the first day, an entire industry began to think differently about its future. If BuzzFeed could find an audience among public investors, companies like Vice, Vox Media, Group Nine and Bustle Digital Group — all of whom had venture capital backers who wanted a return on their investment — could either go public or take publicly traded shares as part industry-wide accumulation.
Then the market turned. BuzzFeed ended the day down 11%. The next day, the stocks fell again. By the end of the first week of trading, shares were down 39%.
“I just bought quite a few shares of BuzzFeed at $6,” Brian Goldberg, CEO of Bustle Digital Group, told CNBC at the end of the first week. “If it goes down, I’ll back up the truck.”
BuzzFeed shares are down. and less. By June, shares were under $2. The advertising market began to decline as interest rates rose and corporate valuations fell. Shares first fell below $1 last month. (Goldberg said he didn’t actually buy the stock until it was close to $1 and then sold it during the February AI pop.)
With their fates tied to BuzzFeed’s performance, digital media companies have given up on the dream of aggregation and public experience. Vice announced this week that it is restructuring its global news operation, including laying off 100 employees. The company has been looking for a buyer for over a year. Vox Media sold a 20% stake to privately held Penske Media in February for a $100 million capital injection. Vox and Group Nine merged last year.
Instead of BuzzFeed being the flag bearer for the digital media industry, it now appears trapped on an island, forced to capsize in public as onlookers shake their heads. When it went public, BuzzFeed promised increased revenue, estimating $654 million by the end of 2022, $833 million by the end of 2023, and $1.1 billion by the end of 2024.
BuzzFeed’s actual annual revenue for 2022 was $437 million. Predictions for 2023 and 2024 currently look like pipe dreams.
Peretti may only have one chance to change his company’s fate.
“This seems like an inflection point,” he said.
WATCH: The full CNBC interview with BuzzFeed CEO Jonah Peretti in 2021 when it first came to market