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BuzzFeed’s first week on the stock market turned from bad to worse on Thursday, when the stock lost nearly a quarter of its value.
Its shares fell 23.6 percent to close at $5.87, and at that price, they’re down 31 percent from where they closed on Monday when it debuted as a public company.
Known for both its catchy lists and traditional journalism, BuzzFeed went public by merging with a shell company. special purpose purchasing company or SPAC, It’s a route to the stock market that was popular earlier this year but has since fallen out of favor among investors.
BuzzFeed raised much less money from the merger than it expected after many investors in SPAC asked for their money back. BuzzFeed’s leadership had hoped that going public would make it easier for it to acquire other digital media companies. But doing so will be much more difficult after fundraising fails and the stock remains low.
BuzzFeed, which acquired HuffPost last year, has a market capitalization of $775 million at its current share price.
BuzzFeed’s tough first week will send a chill meeting rooms of other digital media companies they hope to go public or raise new money.
The speed and depth of the decline in BuzzFeed’s stock may be due in part to the small number of stocks open for trading. It may not take a lot of selling to bring the share price down; on the contrary, buying a small amount sends it higher.
BuzzFeed seems to have enough cash on hand to finance its business. It recently raised $150 million from the sale of debt securities. In the nine months to the end of September, it lost $16 million, a small increase from the $21 million loss in the same period of 2020.
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