BuzzFeed shares fall on first day of trading after SPAC merger

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  • Shares of BuzzFeed, a digital media company, fell on Monday after it went public through a special purpose acquisition company.
  • The company’s stock, trading under the ticker “BZFD”, was up more than 35% in the morning.
  • BuzzFeed’s success as a publicly traded company will be viewed by both investors and industry peers alike.

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Shares of digital media company BuzzFeed fell on Monday after rallying more than 35% in its first day of public market trading following a merger with a special-purpose acquisition firm.

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The company’s stock, trading under the “BZFD” ticker, dropped more than 9%.

Plans for a merger with 890 Fifth Avenue Partners were first announced in June. BuzzFeed said it will acquire Complex Networks, a digital publisher that specializes in streetwear, music and culture, for $300 million.

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BuzzFeed is the first significant modern digital media company to enter the public markets and will be closely watched not only by investors but also by other industry peers. Vice, Vox, Bustle, Group Nine and others have considered going public through SPAC and are also candidates for an alliance with BuzzFeed.

While BuzzFeed’s brief stock boom sparked some early investor interest in digital media, other signs indicate distrust in the company’s plans. According to an updated SEC, BuzzFeed expects to raise only $16 million from its offering after investors pulled 94% of the $287.5 million raised by SPAC. filing first reported by wall street journal,

Vice’s plan to follow BuzzFeed in the public market has already stalled this year. Group Nine’s SPAC went public in January but Still haven’t closed a deal.

Jonah Peretti, co-founder and head of BuzzFeed, told Businesshala’s “Squawk Box” that the stock offering will help cement the company’s position on acquiring other digital media companies.

“This space has a great path to profitability,” Peretti said. “With greater scale, you have the ability to invest in commerce, invest in advertising, invest in technology, and really build a modern platform for media.”

BuzzFeed generated $321 million in annual revenue and $31 million in adjusted earnings before interest, taxes, depreciation and amortization in 2020 largely due to its e-commerce business. The company said it expects to generate $654 million in revenue in 2022.

There was an explosion in SPAC deals earlier this year, but signs are in place cooling down,

“We entered a SPAC market that was very hot. Even the companies that weren’t very good companies were picking up on very high valuations and raising a lot of cash,” Peretti said. “In the middle of our process, we definitely noticed that the SPAC market had snowballed.”

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