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BuzzFeed Stock Drops Nearly 24 Percent

BuzzFeed Stock Drops Nearly 24 Percent
Written by publishing team

BuzzFeed’s first week in the stock market turned from bad to worse on Thursday, when its stock lost nearly a quarter of its value.

Its shares fell 23.6 percent, to close at $5.87, and at that price are now 31 percent below where they closed on Monday, when it debuted as a public company.

BuzzFeed, known for its catchy listings and traditional press, went public through a merger with a shell company known as a Special Purpose Acquisition Corporation, or SPAC, a route into the stock market that was popular earlier this year but has since lost favor among investors.

BuzzFeed raised much less money from the merger than it had expected after several investors in SPAC asked for their money back. BuzzFeed’s leadership had hoped that its IPO would make it easier for it to acquire other digital media companies. But doing so will be much more difficult after the fundraising fails and if its stock remains low.

At the current stock price, BuzzFeed, which bought HuffPost last year, has a market value of $775 million.

BuzzFeed’s tough first week will send a chill on the boards of other digital media companies that have been hoping to raise public funds or raise new money.

The speed and depth of the decline in BuzzFeed’s stock may partly be due to the few stocks available for trading. It may not take much selling to push the stock price down; On the contrary, a small amount of purchase will send it higher.

It appears BuzzFeed has enough cash on hand to fund its business. I recently raised $150 million from the sale of debt securities. In the nine months to the end of September, it lost $16 million, a slight improvement from a loss of $21 million in the same period in 2020.

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