Jonah Peretti, founder and CEO of BuzzFeed, attends his company’s public debut outside the Nasdaq in Times Square in Latest York City, Dec. 6, 2021.
Brendan McDermid | Reuters
Corporate stories have ebbs and flows, ups and downs.
Thus far, BuzzFeed‘s journey as a public company has been a bottomless pit. Co-founder and Chief Executive Jonah Peretti could also be running out of time to change his company’s trajectory.
The digital media company known for its listicles and quizzes is in crisis mode. Its stock has fallen 95% because the company went public at $10 a share in December 2021. The shares closed Friday at nearly 54 cents, giving the corporate a market valuation of about $86 million.
If an organization trades for 30 consecutive business days below the $1 mark, Nasdaq will send a deficiency notice to the corporate, giving it 180 more days to top $1 or risk getting delisted. BuzzFeed has traded below $1 for six days in a row as of Friday’s close.
There are loopholes and conditions. BuzzFeed could do a reverse stock split to artificially boost its share value and stay in compliance — a move last yr executed by insurance firm Hippo after it had a mean closing price of lower than $1 over a consecutive 30-day trading period. Hippo continues to survive as a listed company.
Peretti’s plan is to spice up shares back over $1 by persuading investors he’s prepared to run a more profitable company. That is what led him to shut down BuzzFeed’s Pulitzer-winning but money-losing newsroom last week and lay off 180 employees, or 15% of the corporate’s staff.
“I’m attempting to set us up with a greater future and align with major trends,” Peretti said in an exclusive interview with CNBC. “If I try this well, my leadership will probably be successful. If not, it won’t be.”
BuzzFeed reported a net lack of $201 million for 2022 (including a non-cash goodwill impairment charge of $102.3 million) after turning a $26 million profit in 2021. The corporate’s investor day is May 11. Peretti will attempt to persuade shareholders his vision needs to be trusted.
It’s fair to query Peretti’s decision-making in not shutting down BuzzFeed News earlier, he acknowledged. CNBC reported in March last yr that investors asked him to shut it down.
Still, he has no plans to step down as CEO or sell the corporate despite the corporate’s 95% loss in value, he said.
“I’d be more concerned with my leadership if I didn’t see where the market was heading,” he said.
Peretti’s strategy
Peretti hopes incorporating more artificial intelligence into the corporate’s content will each boost engagement and save the corporate on cost. Previously two months, BuzzFeed AI-powered quizzes have led to a 40% spike in how long a user has participated compared with human-generated quizzes, Peretti wrote in a BuzzFeed blog post Thursday.
“Formats that were developed before the AI-revolution, and most of the formats and conventions of the media industry will must be updated and adapted, or begin to feel stale and outdated,” Peretti wrote within the post. “For this reason we have been investing in AI-powered content and launching recent formats like Infinity Quizzes and Chatbot games.”
A few of Peretti’s predictions seem counterintuitive when considering what the following version of the web might entail. He wrote that he expects news homepages to have a resurgence as destinations as social media corporations akin to Facebook, TikTok and Twitter turn their back on news for more general entertainment. That is why he’s confident in the long run of BuzzFeed brand HuffPost, which surged in popularity through the mid-2000s with its creative splash headlines.
“In actual fact on Monday this week, HuffPost hit 16 million page views — a record high since joining BuzzFeed, Inc. — an indication this prediction is already coming true,” Peretti wrote.
Peretti said he believes BuzzFeed can operate profitably by “covering trends, making shopping more playful, creating recent interactive AI formats, and helping creators connect with our audience.”
This, too, may very well be wishful considering if digital audiences move beyond old methods of web usage and toward augmented reality and gaming, where BuzzFeed has no current strategy.
A dream burst
BuzzFeed’s announcement in January that it could begin using AI to assist generate quizzes gave BuzzFeed a temporary surge in value, with shares jumping 120%.
But for essentially the most part, BuzzFeed shares have been all chute and no ladder.
BuzzFeed went public via a special purpose acquisition company, or SPAC, to great fanfare on Dec. 6, 2021. For a moment on that day, shares surged from $10 to greater than $14. BuzzFeed’s valuation briefly surged past $1.5 billion — greater than thrice the quantity Disney offered to purchase it a decade earlier, as described in an excerpt from a recent book by former BuzzFeed News editor-in-chief Ben Smith.
In those early hours of day one trading, a complete industry began occupied with its future in a different way. If BuzzFeed could discover a receptive audience amongst public investors, corporations akin to Vice, Vox Media, Group Nine, and Bustle Digital Group — all of whom had enterprise capital backers who desired to make a return on their investment — could either go public themselves or take publicly traded equity as a part of an industrywide rollup.
Then, the market turned. BuzzFeed ended the day down 11%. The following day, shares fell again. By the top of BuzzFeed’s first week of trading, shares were down 39%.
“I just bought a f—ton of BuzzFeed shares at $6,” Bustle Digital Group CEO Bryan Goldberg told CNBC at the top of that first week. “If it goes lower, I’ll really back up the truck.”
BuzzFeed shares did go lower. And lower. By June, shares were below $2. The promoting market began to sag as rates of interest rose and company valuations suffered. Shares first fell below $1 last month. (Goldberg said he didn’t actually buy shares until they were closer to $1 after which sold them during February’s AI pop).
With their fates tied to BuzzFeed’s performance, digital media corporations have abandoned the rollup dream and the go-public experiment. Vice announced this week it’s restructuring its global news operation, including shedding 100 employees. The corporate has been trying to find a buyer for greater than a yr. Vox Media sold a 20% stake to privately held Penske Media in February for a $100 million capital infusion. Vox and Group Nine merged last yr.
As a substitute of being the flag bearer for the digital media industry, BuzzFeed now looks prefer it’s trapped on an island, forced to publicly flail while onlookers shake their heads. When it went public, BuzzFeed promised surging revenue, estimating $654 million by the top of 2022, $833 million by the top of 2023 and $1.1 billion by the top of 2024.
BuzzFeed’s actual annual revenue for 2022 was $437 million. The predictions for 2023 and 2024 currently appear to be pipe dreams.
Peretti can have only yet one more probability to show his company’s fate.
“This looks like an inflection point,” he said.
WATCH: CNBC’s full interview with BuzzFeed CEO Jonah Peretti in 2021 on market debut
