The content entertainment platform just reported soaring sales for the June-ended quarter, but when is it going public, and is it a buy?
Sept. 10, 2021
In late June, BuzzFeed announced that it will be making its stock market debut via a merger with a publicly traded special purpose acquisition company (SPAC). The merger, with 890 Fifth Avenue Partners (NASDAQ: ENFA), is targeting a whopping $1.5 billion valuation. Fresh out of a new acquisition of Complex Networks, and soaring sales for the second quarter, there is a lot of buzz (sorry for the obvious pun) around the company.
What is BuzzFeed?
BuzzFeed is a U.S.-based internet media, news, and entertainment. It is well known for sharing breaking news, celebrity gossip, and of course, its infamous quizzes which have been used to place adults into their Hogwarts houses.
With headquarters in New York City, BuzzFeed was founded in 2006 by Jonah Peretti and John S. Johnson III, who wanted to build a company that focused on tracking viral content.
When can I buy BuzzFeed’s stock?
The company has not set an exact date for its SPAC merger but it is said to take place in the fourth quarter of 2021.
BuzzFeed’s financials
In the second quarter, BuzzFeed’s revenue increased 51% compared to the prior year to $89 million boosted by gains in advertising and commerce. Advertisement sales jumped 79% year-over-year to $48 million, driven by higher pricing models and an increase in the total number of impressions sold while content revenue jumped 5% to $24 million.
These numbers were filed with the SEC as part of its merger application with 890 Fifth Avenue Partners.
BuzzFeed founder and CEO, Jonah Peretti, said the solid results “lays the foundation for what we expect to be an exciting second half” adding that the group’s “data-informed approach to content creation and capital allocation allows us to capitalize on secular trends in advertising and commerce.”
Is BuzzFeed a Buy?
BuzzFeed may be a risky investment as the online content space is pretty crowded. Companies like it are faced with big competition from legacy publications such as The Wall Street Journal and The New York Times who bring in lots of revenue through their paid readership subscriptions.
BuzzFeed does not enjoy the same loyalty and respect from its readers so a subscription model would likely not work out. This means these sites have more money to compete for general readers as they can pay more for Facebook and Google ad dollars. However, the digital advertising space was said to be worth $378 billion in 2020 in the U.S., meaning there is room for multiple players.
Having said that, BuzzFeed has lots of fans and its light-humored content might just be what we need in the troubling world we live in right now. Sometimes the best escapism from the pandemic and global warming is a fun quiz that you can share with your friends. Still, we’ll have to see at least a couple of earnings reports as a public company from BuzzFeed before we go buzzing around the stock.
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