Took the Harry Potter sorting quiz... still not a wizard. Investors weren’t feeling the magic this week when HuffPost owner BuzzFeed dished up its first public earnings. On the plus side, annual sales were up 24% from 2020. On the not-so-plus side, revenue was still $100M short of what investors expected. BuzzFeed shares are down 40% since its December IPO.
10 reasons your cat’s grumpy… Like most digi-media companies, BuzzFeed makes money through strategically placed ads — alongside “Seinfeld” quizzes and spring break shopping listicles. But a decade ago, the company built out a legit newsroom (think: major investigative reports). Last year BuzzFeed’s global news division even won a Pulitzer. But like many newsrooms, BuzzFeed News bleeds money, to the tune of $10M a year. Now:
- Close: Some shareholders want BuzzFeed to ditch its news biz entirely, saying it could add $300M to its market cap.
- Shrink: BuzzFeed instead wants to cut costs by offering buyouts (the prelude to layoffs) to dozens of news staffers. Three top editors have already quit.
- Pivot to video: The company says it can help offset news losses by growing its e-comm biz, including producing and monetizing more vertical TikTok-esque videos.
Self-reliance is hard to achieve… in the digi-media economy. Publishers like BuzzFeed rely on clicks from Meta and YouTube to drive traffic — and a single algorithm change could crush their numbers. Last year BuzzFeed warned that a heavy reliance on social-media platforms could hurt its business, and it has. In its earnings call, its CFO repeatedly mentioned that its audience was abandoning Facebook, where the bulk of its e-com traffic comes from.