BuzzFeed, known for its listicles and quizzes, has been struggling as a public company since it went public in December 2021. The company’s shares have fallen 95%, and its market valuation is currently at about $86 million. If a company’s stocks trade for 30 consecutive days below the $1 mark, Nasdaq will send the company a deficiency notice, 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.
Peretti’s Plan to Save BuzzFeed
CEO Jonah Peretti’s plan is to boost shares back over $1 by persuading investors he’s prepared to run a more profitable company. Last week, he shut down BuzzFeed’s Pulitzer-winning but money-losing newsroom and laid off 180 employees, or 15% of the company’s staff. BuzzFeed reported a net loss of $201 million for 2022, including a non-cash goodwill impairment charge of $102.3 million, after turning a $26 million profit in 2021. Peretti will try to convince shareholders his vision should be trusted at the company’s investor day on May 11.
BuzzFeed’s Future and Peretti’s Predictions
Peretti hopes incorporating more artificial intelligence into the company’s content will both boost engagement and save the company on cost. In the past 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 said he believes BuzzFeed can operate profitably by “covering trends, making shopping more playful, creating new interactive AI formats, and helping creators connect with our audience.”
However, some of Peretti’s predictions seem counterintuitive when considering what the next version of the internet might entail. He wrote that he expects news homepages to have a resurgence as destinations as social media companies such as Facebook, TikTok, and Twitter turn their back on news for more general entertainment. That’s why he’s confident in the future of BuzzFeed brand HuffPost, which surged in popularity during the mid-2000s with its creative splash headlines.
Overall, Peretti may have only one more chance to turn his company’s fate. BuzzFeed promised surging revenue when it went public, estimating $654 million by the end of 2022, $833 million by the end of 2023, and $1.1 billion by the end of 2024. However, BuzzFeed’s actual annual revenue for 2022 was $437 million, and the predictions for 2023 and 2024 currently look like pipe dreams. With their fates tied to BuzzFeed’s performance, digital media companies have abandoned the rollup dream and the go-public experiment. Vice announced this week it’s restructuring its global news operation, including laying off 100 employees.
In conclusion, BuzzFeed’s journey as a public company has been rocky, and Peretti may be running out of time to alter his company’s trajectory. He hopes to save it by shutting down the money-losing newsroom, incorporating more AI into the company’s content, and persuading investors he’s prepared to run a more profitable company. However, Peretti’s predictions seem counterintuitive when considering what the next version of the internet might entail, and he may have only one chance left to turn BuzzFeed’s fate around.
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