BuzzFeed on the brink, Jonah Peretti tries to turn the tide


Jonah Peretti, Founder and CEO of BuzzFeed, attends his company’s public debut outside the Nasdaq in Times Square in New York City on December 6, 2021.

Brendan McDermid | Reuters

Business stories have ebbs and flows, ups and downs.

At this point, BuzzFeedThe journey of as a public company has been a bottomless pit. Co-founder and CEO Jonah Peretti may be running out of time to alter the trajectory of his company.

The digital media company known for its lists and quizzes is in crisis mode. Its stock has fallen 95% since the company went public at $10 a share in December 2021. Shares closed Friday at nearly 54 cents, giving the company a market valuation of around $86 million. dollars.

If a company trades for 30 consecutive business days below $1, the Nasdaq will send a notice of deficiency to the company, giving it 180 more days to go over $1 or risk being delisted. BuzzFeed has traded below $1 for six straight days at Friday’s close.

There are gaps and conditions. BuzzFeed could conduct a stock split to artificially boost its stock value and stay compliant – a move the insurance company made last year Hippopotamus after having an average closing price below $1 over a trading period of 30 consecutive days. Hippo continues to survive as a listed company.

Peretti’s plan is to get the stock back above $1 by persuading investors that he’s ready to run a more profitable business. That’s what led him to shut down the Pulitzer-winning but money-losing BuzzFeed newsroom last week and lay off 180 employees, or 15% of the company’s staff.

“I’m trying to prepare for a better future and align with the big trends,” Peretti said in an exclusive interview with CNBC. “If I do it right, my leadership will be successful. If not, it won’t.”

BuzzFeed reported a net loss of $201 million for 2022 after making a profit of $26 million in 2021. The company’s Investor Day will be May 11. Peretti will try to convince shareholders to trust his vision.

It’s fair to question Peretti’s decision not to close BuzzFeed News early, he acknowledged. CNBC reported in March last year that he was asked by investors to shut it down.

Still, he has no plans to step down as CEO or sell the company despite the company losing 95% of its value, he said.

“I would be more concerned about my leadership if I didn’t see where the market was going,” he said.

Peretti’s strategy

Peretti hopes that integrating more artificial intelligence into company content will boost engagement and save the company on costs. Over the past two months, quizzes powered by BuzzFeed AI have resulted in a 40% increase in user participation time compared to human-generated quizzes, Peretti wrote in a post. BuzzFeed Thursday blog post.

“Formats that were developed before the AI ​​revolution, and many media industry formats and conventions will need to be updated and adapted, or will start to feel stale and outdated,” Peretti wrote in the post. “That’s why we invested in AI-powered content and launched new formats like Infinity Quiz and Chatbot games.”

Some of Peretti’s predictions seem counterintuitive when you consider what the next version of the Internet might entail. He wrote that he expects news homepages to experience a resurgence as destinations as social media companies such as Facebook, TikTok and Twitter turn their backs on news for more entertainment. general. That’s why he’s confident in the future of the BuzzFeed HuffPost brand, which rose to popularity in the mid-2000s with its creative headlines.

“In fact, on Monday of this week, HuffPost hit 16 million page views — a record since joining BuzzFeed, Inc. — a sign that this prediction is already coming true,” Peretti wrote.

Peretti said he believes BuzzFeed can operate profitably by “covering trends, making shopping more fun, creating new interactive AI formats, and helping creators connect with our audience.”

That, too, could be wishful thinking if digital audiences move beyond old ways of using the internet and into augmented reality and gaming, where BuzzFeed has no current strategy.

A shattered dream

BuzzFeed announced in January that it would start using AI to help generate quizzes gave BuzzFeed a brief boost in valuewith shares jumping 120%.

But for the most part, BuzzFeed’s shares have been just downfalls and no scale.

BuzzFeed went public via a Special Purpose Acquisition Company, or SPAC, to much fanfare on Dec. 6, 2021. For a while that day, shares surged from $10 to over $14. BuzzFeed’s valuation briefly topped $1.5 billion — more than three times the amount Disney offered to buy it a decade earlieras described in an excerpt from a new book by former BuzzFeed News editor Ben Smith.

In those early hours of the first day of trading, an entire industry began thinking about its future differently. If BuzzFeed could find a receptive audience among public investors, companies such as Vice, Vox Media, Group Nine and Bustle Digital Group – all of which had venture capital backers willing to make a return on their investment – ​​could either go public. themselves, or take publicly traded stocks in an industry-wide rollup.

Then the market turned. BuzzFeed ended the day down 11%. The next day, the shares fell again. By the end of BuzzFeed’s first week of trading, shares were down 39%.

“I just bought a f—ton of BuzzFeed stock at $6,” Bustle Digital Group CEO Bryan Goldberg told CNBC at the end of that first week. “If it goes any lower, I’m going to really back the truck up.”

BuzzFeed shares fell. And lower. In June, shares were below $2. The advertising market began to sag as interest rates rose and corporate valuations suffered. Shares fell below $1 for the first time last month. (Goldberg said he didn’t buy stocks until they were closer to $1, then sold them on the February AI pop).

With their fate tied to the performance of BuzzFeed, digital media companies have abandoned the rollup dream and the public experience. Vice announced this week it is restructuring its global press operation, including laying off 100 employees. The company has been looking for a buyer for over a year. Vox Media sold a 20% stake in the private company Penske Media in February for a capital injection of $100 million. Vox and Group Nine merged last year.

Instead of being the standard-bearer of the digital media industry, BuzzFeed now looks like it’s trapped on an island, forced to fuss publicly while viewers shake their heads. When it went public, BuzzFeed promised rising revenueestimating $654 million by the end of 2022, $833 million by the end of 2023, and $1.1 billion by the end of 2024.

BuzzFeed’s actual annual revenue for 2022 was $437 million. Forecasts for 2023 and 2024 currently look like pipe dreams.

Peretti may just have one more chance to change the fate of his company.

“It feels like an inflection point,” he said.

WATCH: CNBC’s full interview with BuzzFeed CEO Jonah Peretti in 2021 about the early days of the market

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