BuzzFeed has crashed as a public company — but there’s a silver lining

BuzzFeed had a tough week.

The media company — originally built on listicles and surveys — went public last Monday. Per CNBC, the stock is already down 39% and sits at a market cap of $808m.

The true value of digital media firms…

… has been hidden for years. As private companies, the most well-known brands of the 2010s were able to raise money at eye-popping valuations:

• Vox Media was valued as high as $1B
• Vice Media hit $5.7B
• BuzzFeed’s top valuation was $1.7B

These terms were set by a few big-name investors, though. And there is no guarantee that public investors will agree.

With markets red-hot in 2021…

… a number of media names tried to cash in by using special purpose acquisition companies (SPACs). Also called “blank check companies,” SPACs are a less onerous path to public markets vs. a traditional IPO.

Vice, Vox, Group Nine, Bustle Digital Group, and BuzzFeed all tested the SPAC waters.

Only BuzzFeed has pulled it off.

Now, it’s an industry bellwether

Even with its stock down hard, it has given other media firms a clear indication of their market values. Bustle CEO Bryan Goldberg tells CNBC the number he’s looking for is if BuzzFeed can trade at a 4x revenue multiple (it’s currently at ~2.5x).

Meanwhile, BuzzFeed has stock to potentially make acquisitions. In recent years, consolidation has been standard in digital media:

• Vox acquired New York Magazine in 2019
• Vice acquired Refinery29 in 2019
• Group Nine acquired PopSugar in 2019
• Bustle Media Group has acquired Gawker, Mic, Nylon, The Outline, and Flavorpill
• BuzzFeed acquired HuffPost in 2020 and Complex Networks as part of its SPAC deal

If BuzzFeed turns around, the headline will write itself: “10 reasons BuzzFeed is back. You won’t believe No. 5.”