BuzzFeed Inc., the once-influential media company, experienced a significant surge in its stocks following the sale of its pop-culture site Complex at a lower price than its initial acquisition in 2021. Despite selling Complex for less than what it paid initially, BuzzFeed’s shares rose by over 126% after hours on Wednesday. This move comes as BuzzFeed plans to make further staff cuts and slashes its fourth-quarter sales outlook.
BuzzFeed sold Complex to NTWRK, an online-shopping platform, for $108.6 million in cash. However, in 2021, BuzzFeed had acquired Complex Networks, which included Complex and First We Feast, for nearly $300 million in cash and stock. Although Complex was sold, First We Feast will remain under the BuzzFeed umbrella. As part of its cost-cutting measures, BuzzFeed also announced that it would lay off 16% of its remaining staff, saving approximately $23 million.
According to BuzzFeed’s Chief Executive Jonah Peretti, the sale of Complex is an important strategic step for the company as it aims to adapt its business to be more profitable, nimble, and innovative. Peretti believes that combining Complex with NTWRK’s expansive, commerce-driven business will unlock greater value for the Complex brand.
This recent development marks another contraction for BuzzFeed, which rose to prominence over the last decade with its keen understanding of social media. However, the company has faced financial losses, and its stock has suffered since its public debut in 2021. Last year, BuzzFeed shut down its news division as the media industry grappled with challenges in online advertising and subscriptions, changes in social media platform priorities, and pressure from hedge funds and investors to generate profits.
Furthermore, the digital advertising market has remained unstable since the onset of the pandemic. BuzzFeed acknowledged this “tighter digital-advertising market” as it revised its fourth-quarter sales outlook. The company now expects fourth-quarter revenue to be between $73 million and $78 million, significantly lower than its previous outlook of $99 million to $110 million provided in November.
This series of events highlights the ongoing struggles faced by digital media companies in an ever-evolving landscape. While BuzzFeed’s stock surge following the sale of Complex may seem promising, it is essential to recognize the broader challenges faced by the industry. BuzzFeed’s ability to adapt and innovate will play a crucial role in determining its future success in an increasingly competitive market.
In conclusion, BuzzFeed’s stocks experienced a significant surge following the sale of Complex, despite the lower price compared to its initial acquisition in 2021. The company’s decision to make staff cuts and revise its sales outlook reflects the challenges faced by the broader digital-media industry. As the media landscape continues to evolve, BuzzFeed must navigate these obstacles and find innovative ways to generate profits and remain relevant in an ever-changing digital world.
