BuzzFeed (BZFD) stock price has erased some of the gains made earlier this year as concerns about the company continues. It initially surged to a high of $4.5 after Vivek Ramaswamy invested in it a few months ago. It has now crashed by almost 50% to the current $2.36, bringing its valuation to $85 million.
BuzzFeed is a fallen angel in media
BuzzFeed is one of the top fallen angels in the media industry. A few years ago, it was one of the fastest-growing companies in the media space. As a result, it received almost $500 million in funding from the likes of Andreessen Horowitz and NBCUniversal. It was valued at over $2 billion.
BuzzFeed was part of a small group of media tech companies that were seen as big disruptors in the industry. Some of these firms have now lost steam, while others have already gone bankrupt. A good example of this is Vice Media, which was valued at over $5 billion and went bankrupt in May 2023.
The other big name was Verizon, which assembled a collection of media companies like AOL and Yahoo. It then sold the business to Apollo Global in a $4.8 billion deal.
BuzzFeed’s business has continued to struggle in the past few years, which has pushed it to slash costs and exit some of its business. It sold Complex in a $109 million deal earlier this year, a big haircut since it acquired it for $300 million. BuzzFeed then closed its news operation and announced hundreds in layoffs.
BuzzFeed’s challenge is that the way people consume media has changed in the past few years. This trend has affected virtually all media companies, including large players like the Washington Post and The Atlantic.
Other traditional media companies like Paramount Global and Warner Bros. Discovery have also struggled. Paramount, which was once valued at over $30 billion, now has a market cap of less than $10 billion. Warner Bros’ valuation has moved from $50 billion to about $19 billion.
These companies have been disrupted by platforms like Instagram, TikTok, and X, which have become the main source of news.
Also, advertisers have changed how they allocate their marketing budgets. This explains why most media companies that focus on advertising have struggled in the past few years.
BZFD’s business is not improving
Unfortunately for BuzzFeed, its business is not improving. Data by SimilarWeb shows that the website had over 81.8 million visitors in September, a 10% drop from the previous month. This trend will likely continue this year.
The most recent results showed that BuzzFeed’s revenue dropped by 24% in the second quarter to $46.9 million. This decline was mostly because of a 19% drop in advertising and a 48% drop in content revenue. Its commerce and other revenue rose by about 7% during the quarter.
Other important metrics also continued to worsen. For example, the average time spent in the website dropped by 5% to 71 million hours.
Data by Yahoo Finance shows that analysts expect BuzzFeed’s third-quarter revenue will be $75.6 million, a 43% drop from the same period last year. This decline will partially be because of its Complex sale.
For the year, analysts expect that BuzzFeed’s revenue will be $252 million, followed by $336 million in the next financial year.
Notably, BuzzFeed’s performance has weakened in an election year when it should be doing well.
Also, there are signs that user engagement has retreated in the past few months. For example, its number 1 trending story at the time of writing has only 71 comments. In the past, such trending stories used to generate thousands of comments from users.
BuzzFeed stock price analysis
BZFD chart by TradingView
The daily chart shows that the BZFD stock has been in a downtrend in the past few weeks such that it has moved below the 50-day and 200-day Exponential Moving Averages (EMA). It has also moved below the 50% Fibonacci Retracement point and the descending trendline shown in orange.
Therefore, the stock will likely have a bearish breakout as sellers target the next important support level at $2, its lowest point in June. The key catalyst for the stock will be its earnings, which are scheduled on November 12.
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