Accuracy in Media

BuzzFeed, as a company, seems not to be doing very well. This makes sense, as we’ve long been saying that BuzzFeed as a news outlet doesn’t do very well either.

But while BuzzFeed News shrinks, the other parts – the clickbait on BuzzFeed itself — are also not doing well by the correct measures of financial success.

As a company, BuzzFeed can be thought of as the two BuzzFeed sites, HuffPost and Complex Networks. Total turnover is of the order of $400 million a year or so (or four times the last announced quarter’s $106 million). On which they’re losing nearly $100 million a year (4x Q2 2022 losses of nearly $24 million).

It does, in fact, get worse. One of the premier stock trading sites, Seeking Alpha, has this “Warning: BZFD is at high risk of performing badly.” BZFD is the stock ticker for BuzzFeed and it did its IPO in December. Since then, the value of the stock has fallen 84%. The current betting is that it’s not going to improve all that much either.

The IPO was done through a SPAC. This is when folk put in cash to a shell that gains a listing on a stock market then looks around for a company to buy. Folk pay in their $10 per piece of stock and the crucial point for us here is that when the company to be bought is identified then they can take their $10 out again and not take part. When it was revealed that this SPAC, this shell with cash in it, was going to buy BuzzFeed then 94% of the shareholders asked for their $10 back. This is known as “not a huge vote of confidence” in BuzzFeed. Not only was it 94% who said no thanks, that’s the worst to-date performance in any SPAC.

Things have got worse since then. Internally BuzzFeed mangled who could sell stock at that IPO. The management did well enough, those who had built the company with their labour didn’t quite so much. Always interesting how those supposedly for the workers don’t seem to care much for their own workers.  Then when the lockup period ended – lots of people aren’t allowed to sell their stock for the first 6 months after an IPO – the flood of people wanting to get out dropped the stock price another 40%.

It’s against this background that BuzzFeed News – that’s the Pulitzer Prize-winning part, largely there to give social gloss to the clickbait – has been waving bye-bye to the editorial team and firing journalists. This is rather why Bank of America is downgrading the stock. Even at 84% down, it might be still not a good deal.

Here’s their forecast for revenue, year on year: “We expect overall revenues to grow in the range of 4 to 8 percent year-over-year” which sounds good – and that’s BuzzFeed’s estimate there. Except inflation’s at 8% and more and this is a before inflation estimate. Their best assumption is that they will stand still in revenue – even while costs will of course go up by inflation or possibly more. They’re just not doing well at all. They’re falling behind inflation, not growing at all.

There’s an old saying in the business and stock market world – go woke, go broke. What is meant is that if you cater just to fashionable whims then you end up missing the point of being a business, a corporation, at all. For you’re concentrating upon being woke, not running a business.

We might well have found our example for this business cycle in BuzzFeed.

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