Buzzfeed IPO: What you need to know about a 2021 public offering


BuzzFeed has been a top digital media firm since its 2006 inception. Known for bringing popular memes, listicles, and other fun content to life—as well as legit journalism—BuzzFeed has steadily increased its funding up until its 2016 Series G, which left it with a hearty $1.7 billion valuation.  

In 2020, BuzzFeed acquired HuffPost, a move that swiftly brought the new parent company into the spotlight once they laid off a bunch of employees. Now, years after first mentioning hopes of taking the company public, CEO Jonah Peretti is preparing to merge BuzzFeed with a SPAC (special purpose acquisition company) and become publicly traded. 

TL;DR 

  • Jonah Peretti co-founded BuzzFeed with John Johnson in 2006. Peretti continued to work at The Huffington Post for several more years while developing BuzzFeed.
  • BuzzFeed is a digital media company whose portfolio includes multiple platforms and networks aimed at millennial and Gen-Z audiences. 
  • In 2020, the company acquired fellow digital media site HuffPost for an undisclosed amount. 
  • BuzzFeed’s revenues in Q1 2021 grew by 14% YoY, and adjusted EBITDA rose by 54%. 
  • Company executives announced in June that they’re pursuing an IPO through a special purpose acquisition company, or SPAC. 
  • The SPAC merger is expected to close sometime in the Q4 2021 and also includes the acquisition of youth entertainment company Complex Networks. 

A quick history of how BuzzFeed got so much buzz 

BuzzFeed started by featuring mostly fun and lighthearted content like quizzes and listicles, but the multimedia company has also grown to include videos and a journalism division. 

In 2012, hiring journalist Ben Smith helped develop the news division, which has produced Pulitzer-Prize-nominated work. Mark Schoofs took over as editor-in-chief of BuzzFeed News in 2020 and got to relish in the division’s first Pulitzer win the following year. 

In the early years, BuzzFeed relied on a native advertising strategy, in which paid ads appear on the page in a format and tone that’s similar to the primary content.

Gradually, as social-media platforms began changing their algorithms to make it more difficult for ads to pop through, the company shifted its advertising to use more programmatic ads, e-commerce, and content licensing.  

In what TechCrunch described as bringing HuffPost “full circle,” BuzzFeed acquired rival HuffPost in November 2020. Since BuzzFeed’s CEO and founder Jonah Peretti had also played an integral role in building up The Huffington Post before starting BuzzFeed, it was an interesting turn of events for HuffPost to come under BuzzFeed’s umbrella. 

“With the addition of HuffPost, our media network will have more users spending significantly more time with our content than any of our peers,” said Peretti. 

BuzzFeed’s private fundraising rounds 

Here’s a little review of how BuzzFeed has raised funds over the years. 

  • In 2006, the company raised non-equity assistance. 
  • Series A: In July 2008, BuzzFeed raised its Series A funding of $3.5 million from Hearst Ventures, the investment arm of media and information company Hearst.
  • Series B: RRE Ventures led a Series B funding round in 2010, bringing in an additional $8 million. 
  • Series C: In January 2012, New Enterprise Associates led four other investors in a $15.5 million fundraising round for BuzzFeed. 
  • Series D: New Enterprise Associates returned for a Series D funding round a year later, in January 2013. Together with other investors, they helped BuzzFeed raise another $19.3 million. 
  • Series E: In August 2014, BuzzFeed garnered $50 million in a funding round led by private venture capital firm Andreessen Horowitz, with General Atlantic as the other investor. 
  • Series F: NBCUniversal jumped in with a massive $200 million funding round for BuzzFeed in August 2015. 
  • Series G: The following year, in November 2016, NBCUniversal led another $200 million funding raise. BuzzFeed holds a $1.7 billion valuation as of the latest funding.

Path to the BuzzFeed SPAC IPO 

Speculation about an IPO for the digital media firm has been buzzing for years, and CEO Peretti hinted as early as 2015 that the company had eventual intentions of going public. 

In November 2020, BuzzFeed acquired HuffPost in a deal brokered with Verizon Media. BuzzFeed’s founder and chief executive Jonah Peretti remained CEO of the newly combined company. 

Less than a month later, 47 HuffPost employees lost their jobs, a move that CEO Peretti said was necessary to mitigate losses stemming from the HuffPost operation. Employees were laid off via email, a move that many viewed as poor form. Ultimately, a BuzzFeed representative expressed regret over the ordeal. 

This year, BuzzFeed reporters earned their first-ever Pulitzer Prize win, awarded in the international reporting category for coverage exposing China’s detention of Uyghurs, a primarily Muslim minority, in its Xinjiang region.

After much adieu, BuzzFeed is finally taking real steps toward a public listing through a SPAC. Unlike a traditional IPO, a SPAC listing requires a blank-check company to go public first, with the sole purpose of taking another company public.

When is the BuzzFeed SPAC merger date?

In June, BuzzFeed announced proceedings for a SPAC merger and, the following month, announced the registration statement filing with the SEC.

The blank-check company merging with BuzzFeed is called 890 5th Avenue Partners, Inc. 

890 currently trades on the Nasdaq under the ticker symbol ENFA. After the merger with BuzzFeed, the newly public company will be known as BuzzFeed Inc. and trade under the new ticker BZFD. 

For some companies, choosing to go public via a SPAC merger is a logical choice for its expediency, as it can shorten the timeline of an IPO by 75%. 

As part of the deal, Redwood Capital will lead $150 million in convertible note financing with institutional investors including CrossingBridge Advisors, Cohanzick Management, and Silver Rock Financial LP.

CEO Peretti noted, “We remain excited about the pending acquisition of Complex Networks and look forward to working with its talented team to accelerate their commerce and advertising revenue growth while allowing BuzzFeed to benefit from their complementary audience and business profile.”

BZFD hopes to list by the end of 2021.

Risks and opportunities for BZFD stock 

While BuzzFeed snagged a $1.7 billion valuation in 2016, the company is reportedly seeking a $1.5 billion valuation in the merger with 890 5th Avenue (this includes the purchase of Complex Networks).  

BuzzFeed has strong competition in both Facebook and Google. However, going public will provide cash and stock that could facilitate more profitable acquisitions like the HuffPost deal. 

BuzzFeed is profitable and expects decent revenue increases, projecting $521 million in revenue for 2021 (a huge increase over 2020’s $321 million) and $624 million in 2022. The company expects to exceed $1 billion in revenue by 2024. Plus, Peretti (a white man) believes that adding Complex Networks gives BuzzFeed a more diverse audience.

Vox also reported that BuzzFeed projects about one-third of future revenue to come from selling products (partially on Amazon) like BuzzFeed-branded swag.

Bottom line

BuzzFeed has grown a lot in 15 years and, despite competition from the big guns like Google and Facebook, seems to be gathering strength. Thanks to a couple of hefty acquisitions, BuzzFeed’s valuation may be lower following the SPAC merger than it was a few years ago. But that doesn’t mean BZFD can’t be a growth stock once it hits the market.

BuzzFeed may have kept the dollar value of their HuffPost acquisition private, but they’ll have to get comfy sharing intimate financials (even the not-so-pretty ones) once they’re on the public market.

Related: What you need to know about a Stash IPO.

Rachel Curry is Pennsylvania-based content writer and journalist talking all things finance. She likes to give meaning to numbers by humanizing them. You can connect with her on Twitter at @writingsofrach.

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