Buzzfeed stock has gone public. As a result, you could add the company to your investment portfolio if you wanted to. The company saw its users increase and eventually decided to become public. BuzzFeed became the first digital media company to go public. It opened the door for similar companies to consider the idea. How did BuzzFeed do since its IPO and how did similar companies fare? Let’s find out.
BuzzFeed Stock Story (NASDAQ: BZFD)
During the previous decade, many Facebook users were buzzing over BuzzFeed. Numerous personality, movie characters and other quizzes were offered on the platform.
It was a hit among groups of friends to compete for the desired results. I remember scrolling through my feed and seeing many of my friends sharing their results.
I wanted to be part of the fun and did the same. Occasionally, BuzzFeed articles bout useful gadgets with a link to purchase the item or news stories popped up. It was very clickbait, but we wanted to know the content and often clicked.
Before going public, BuzzFeed had an interesting journey. BuzzFeed’s CEO since its early days in 2006, Jonah Peretti, wanted to reach billions of people with exciting content. Peretti and his partners decided to launch a bot, BuzzBot, to track trendy subjects.
The team then hired writers and editors to write on the subjects. The idea was successful. As soon as the website began attracting users, it began to raise funding.
Today, BuzzFeed has millions of monthly visitors across all its content and partners. One of the main ones is Huff Post, which the company reacquired in 2019. And now there’s Buzzfeed stock to trade.
How BuzzFeed Became Mainstream
Remember the meme of the disaster girl? If you don’t, no worries, we uploaded it for you.
It was BuzzFeed’s first-ever viral meme. To this day, it is still a hit. In its early days, the company successfully created popular memes that brought online users together.
When the platform began to grow, it began expanding into news articles and many other content outlets.
For those who remember Facebook in its early days, BuzzFeed articles, quizzes, stories and useful tools and appliances were everywhere. The company found a way to become mainstream through other social media platforms. Its growth exploded. Which made them want to go public with Buzzfeed stock.
BuzzFeed Stock IPO
Let’s fast-forward to 2021. BuzzFeed decided to become the first digital media company to go public. The company convinced many investors to pledge $288M into the company. To skip many steps, they did it thanks to a Special-Purpose Acquisition Company (SPAC). What is a SPAC?
It is a blank company with no business that is set to acquire another existing company. When it came time to deliver the funds, investors withdrew 94% of the promised sum. The majority of investors didn’t believe in the company anymore once it went public.
As a result, the stock price fell 39% in its first trading session. Ever since, it has been declining. Today, it’s down almost 60% since its debut in November of 2021. What caused this rapid decline in Buzzfeed stock?
BuzzFeed Stock Goal
One of BuzzFeed’s main goals was to be the first digital media company to go public to have access to more funding and to open new doors. Its management also wanted to set a standard for similar companies and their valuations. We will explore these companies in the next section.
As for BuzzFeed, the public debut and following months didn’t go as planned. The number of viewers didn’t grow as anticipated and less revenue was generated. Furthermore, the digital media industry is already saturated.
Ad revenue is a big component, but it takes more than just content to attract viewers. When the industry is full of Googles, Facebooks and other multi-national companies, it’s imperative to have an edge on these websites with some creativity.
BuzzFeed had that extra spark in its early days, but it seems to be slowly fading as the company progresses. Over the last decade, there have been talks of mergers between many digital media companies. After seeing the BuzzFeed stock public flop, some of them may reconsider before going public unless they are ready to guarantee strong future growth.
Let’s take a look at other digital media companies and where they are at in their growth.
Digital Media Company Stocks
Many digital media companies have been around for decades. Not all have gone public like Buzzfeed stock though.
Many of them had to adjust their business model to adapt to the everchanging demand for content.
The majority of mainstream independent digital media companies remain private. Will that change?
Let’s begin this section with Vice. Recently, the company is valued at around $3B. That’s about half of its 2017 valuation. It still remains almost 6 times more valuable than BuzzFeed stock though.
In 2021, Vice attempted to go public via a SPAC, but failed. Investors weren’t interested. They didn’t believe it was an accurate valuation. News outlets are far too common. Vice and its partners are competing with more and more companies.
Last decade, the company saw a steady growth of unique visitors on its platforms. Earlier this year, the number was below January 2016’s number. Today’s generations are more interested in short entertaining videos than news articles or a 20-minute long story in a foreign country. As for ad revenue, it is almost impossible to compete with the big guns.
Where is Vice heading? In my opinion, Vice will continue with more acquisitions. In 2019, Vice acquired Refinery29, a feminist digital media and entertainment company.
It was focused on young women. This expanded its footprint and added new readers to its database. In 2018, Vice acquired Villain, an experimental events company. Many consumers seek different ways to be entertained. This is a great example to satisfy their needs.
As for an IPO, I find it unlikely. There is a higher chance Vice gets eventually acquired by another media giant for a hefty premium.
The company has fewer unique visitors on its platforms than Vice and BuzzFeed. Nevertheless, that number is slowly growing.
If companies in this business want to compete with industry giants, going public isn’t the answer just yet. They must innovate or join forces. They see what happened to Buzzfeed stock.
Industry leaders managed to combine their digital media platforms with other platforms for viewers. Companies like Discovery (NASDAQ: WBD) have very successful Netflix shows, TV channels and their own production companies.
However, they have to innovate and create original content. They must spend more money on advertising to gain new users.
Now You Know How to Invest in BuzzFeed Stock
To conclude on Buzzfeed stock, the digital media space is very saturated. Almost anyone can create a website or a YouTube page and produce videos about domestic and international content. We have all the tools at our disposal for this.
However, competition is fierce and only the best ones are successful. BuzzFeed, Vice and Vox are all great examples of companies that were successful in this space, but are losing ground in today’s world. BuzzFeed’s management decided to go public to grow, but they are instead facing tough choices about their future growth.
Other media stocks like Warner, Netflix and Disney are thriving. However, they are also facing difficulties due to all the competition. Trading in this sector is risky and unpredictable. Success comes from originality and creativity. Users always want something new. Those that can deliver, will come on top.
If you want to learn more about how you can profit from the stock market, head on over to our free library of educational courses. We have something for everyone, including trading options for those with small accounts.