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If you want to have a piece of BuzzFeed, just wait for the first week of December.
publisher’s plan to merge 5th Avenue Partners, a blank check company with 890, will be put to a shareholder vote on December 2, according to a recent announcement. securities filing. If investors accept the deal, BuzzFeed could begin trading on the public markets on December 6.
A few extra days are needed due to a second reunion. BuzzFeed, led by founder and CEO Jonah Peretti, will acquire sports and entertainment publisher Complex Networks as part of its deal with 890 5th Avenue Partners. BuzzFeed and Complex are expected to generate $521 million in revenue this year, with a pre-tax profit of approximately $57 million.
For now, BuzzFeed, known for its meme-focused listings, quizzes, and a news section that earned the company its first Pulitzer Prize this year, is still losing money. For the third quarter, the publisher hit $90 million, up 20 percent, but lost about $3.6 million. Excluding certain items such as pending transaction-related taxes, interest, and costs, the company said it made almost $6 million. The gains in revenue came largely from a surge in display advertising a year after the pandemic devastated the advertising business.
Combined with Complex Networks, BuzzFeed would generate $121 million in sales, a 17 percent gain over last year, meaning it would grow more slowly as a combined business than BuzzFeed alone would have. Adding Complex that also loses money will still get BuzzFeed more readers, which in turn will bring in more advertisers.
In a statement Friday, Mr. Peretti described the company’s financial performance as “impressive” and said its third-quarter results “highlight the strength of our diversified, cross-platform business model.”
Despite retaining control of the business after planned mergers, Mr. Peretti will face a new set of pressures when BuzzFeed goes public. Institutional investors seeking quarterly returns will have to respond to expectations that conflict with long-term financial goals that startups live (and die) for. In other words, continued losses and slower growth will only be tolerated for so long.
If the stock doesn’t reach a certain level, according to its securities filings, it may have to sell some of its shares to NBCUniversal, one of BuzzFeed’s early backers. The merger with the blank check company puts BuzzFeed at approximately $1.5 billion, but investors expect that to increase as they begin public trading.
Recent deals in digital publishing have potentially inflated valuations. German conglomerate Axel Springer agreed in august Acquiring Politico for $1 billion, or about five times its annual revenue. If investors feel similarly bullish on BuzzFeed, it’s worth more than $2.5 billion.
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