Cakes, cats, bright yellow OMG signs, Instagram star Dude With Sign and a lot of confetti were on hand Monday to help digital media company BuzzFeed make its public debut on Nasdaq, but did it hit the mark with investors?
So far, the answer appears to be no with its stock, now trading as “BZFD”, down by just over 11 percent to $8.56 after briefly spiking by as much as 40 percent earlier in the day.
BuzzFeed’s journey to the public markets comes through a merger with 890 Fifth Avenue Partners, Inc., a special purpose acquisition company commonly referred to as SPAC, which was completed on Friday, the same day it closed its acquisition of global youth entertainment company Complex Networks, joining other brands such as HuffPost and Tasty.
When BuzzFeed first unveiled the SPAC deal in June, it said it could raise around $288 million, but last week it revealed that it had $16 million after some investors opted not to participate, although it has about $150 million in debt financing.
“Today I’m grateful to everyone who helped make BuzzFeed the destination for the best things on the internet: the video creators, the writers, the award-winning journalists, the internet visionaries — and the most socially engaged, diverse audience the world has ever seen,” said BuzzFeed founder and chief executive officer Jonah Peretti, who rang the bell at Nasdaq. “Our next chapter as a public company will help BuzzFeed, Inc. become a hub for even more brands and creators, visionary founders and CEOs, high-quality content for the tech platforms, and so much more.”
Other media companies considering SPACs will be following BuzzFeed’s debut closely. Also known as “blank check” entities, SPACs act as a shell company that investors pour money into via an initial public offering. They then use those funds to acquire a company that will inherit its stock exchange listing minus the traditional time-consuming IPO process. While they have been around for a while, media’s interest in them only really took off in 2020 as the pandemic hit the sector hard, making consolidation, especially on the digital side, an increasingly attractive option. Companies slashing marketing budgets, more ads being swallowed up by Facebook and Google and venture capitalist investors’ waning interest in digital media have all played a part.
Bustle Digital Group, the owner of Bustle, Mic and Nylon, among others, is among those companies said to be exploring a potential merger with blank-check acquisition companies aiming for a valuation of at least $600 million. Forbes, meanwhile, has joined forces with Magnum Opus Acquisition Ltd., a special purpose acquisition company, to go public in a deal worth $630 million.
In contrast, Vice Media’s SPAC talks reportedly ended in September, with the Brooklyn-based company instead raising $135 million from existing investors.
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