BuzzFeed’s stock surges then falls in its public debut.
BuzzFeed started trading on the stock market Monday, a big step that could help the company expand while charting a path for other young digital media companies that are also aiming to become publicly traded businesses.
But its debut has been anything but smooth.
The stock, trading under the symbol “BZFD,” tumbled after an initial jump of around 50 percent. It was trading at around $9.18 at 11:45 a.m., down about 5 percent for the day.
The choppy start came after BuzzFeed raised a lot less money than it had expected from the deal that brought it onto the stock market. BuzzFeed merged with a special purpose acquisition company, a transaction that could have raised over $250 million. But last week, the company revealed it had garnered only $16 million after a large number of shareholders declined to participate in the merger, allowing them to recoup money they had invested in the acquisition company.
“I don’t care how we go public,” Jonah Peretti, BuzzFeed’s chief executive, said in an interview on Friday. “Once we saw that we had our path through that market — even though the market was cold — it was just a means to an end to get public.”
BuzzFeed’s business grew as it pioneered new, catchy ways — including listicles and quizzes — of attracting 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 crucial. As part of the deal with the acquisition company, BuzzFeed announced it was buying the sports and entertainment publisher Complex, adding to its purchase of HuffPost last year.
Senior executives at other digital media companies are closely watching BuzzFeed’s debut. Many of those businesses, which have been funded by venture capital firms and by established media companies over the past decade, have faced an increasingly tough advertising climate and are looking for ways to pay back their early investors.
“Just the fact that BuzzFeed is out in the public markets is a milestone for the industry,” Bryan Goldberg, the chief executive of Bustle Digital Group, said in an interview on Monday. “But the first hour of trading wasn’t just a positive surprise, it was a spit-out-your-coffee type of surprise.”
Mr. Goldberg, cautioning that he was speaking early in the first day of trading, said BuzzFeed’s debut had set “a really impressive tone for an industry that many of us feel has been undervalued for years.”
Bustle Digital Group plans to go public next year, Mr. Goldberg said. The company, which publishes the women’s website Bustle, has been acquiring other outlets in recent years, including Gawker and Mic.
Other digital media companies have considered the public route through acquisition companies. Group Nine Media, which publishes PopSugar and Thrillist, formed its own SPAC in last December, saying in a securities filing at the time that it intended to merge with similar companies.
Online commerce is a key part of BuzzFeed’s growth plan — the company has a shopping site that sells products directly to consumers. With many of its competitors putting content behind subscription paywalls, Mr. Peretti said there was an opportunity to “be the place where you can reach the broad public.” He sees other chances to accelerate BuzzFeed’s growth, including via streaming video shows.
Although BuzzFeed did not raise as much money as it hoped from the SPAC merger, it borrowed $150 million by selling convertible bonds — corporate bonds that can be exchanged for stock in the future at a certain price.
In the first half of 2021, BuzzFeed had revenue of $162 million, up from $123 million in the same period a year earlier. It had a loss of $12 million in the first six months of this year, a slight improvement on the $19 million it lost in the equivalent period a year earlier.
(Ben Smith, the former editor in chief of BuzzFeed News who is now The New York Times’s media columnist, holds stock options in BuzzFeed.)
