BuzzFeed’s impending IPO, which could happen as early as today, got a double jolt late last week. Many investors opted to redeem their shares before the company hits the public market, and unionized employees staged a walkout to press for better contract terms.
BuzzFeed’s success in the public-equity markets will set a tone for other digital-media companies, such as Vice, Vox Media, BDG Group (formerly Bustle) as those companies grow and seek to raise capital, as well. But BuzzFeed is likely to raise far less than the $250 million it anticipated, as little as $16 million, TheNew York Times and BuzzFeed’spartner reported on Thursday.
BuzzFeed — BZFD — will trade on Nasdaq.
The company is going public through a special-purpose acquisition company called 890 5th Avenue Partners. In SPAC offerings, the SPAC has no commercial operations of its own and exists to raise money in the initial offering. It then uses the cash to buy or merge with an existing private company. SPACs are also known as “blank check” companies, because investors don’t know what company the SPAC plans to buy before they vote to proceed with the acquisition. They do have the ability to redeem their money at the initial offering price — $10 in this instance — before a deal is reached. In BuzzFeed’s case, many did, but shareholders voted on Thursday to take the company public.
In the press release Thursday, 890 5th Avenue Partners announced gross proceeds are likely to be least $150.0 million from sale of a debt security and $16.2 million in the offering. Part of the merger between 890 and BuzzFeed is BuzzFeed’s acquisition of Complex Networks, a media company focused on youth culture.
Separately, The NewsGuild of New York, which represents about 60 BuzzFeed journalists (of 1,100 total employees), staged a one-day walkout on Thursday, seeking to jump-start stalled contract negotiations.
The company is eyeing a $1.5 billion valuation, but has refused to move from a proposed guaranteed wage increase of 1% per year and a salary floor of $50,000 the guild said in a news story posted on its website. “That is not a sustainable living wage, and it is not enough to attract a true diverse talent pool that’s crucial to the future of BuzzFeed,” union members said in the release.
“We deserve a strong contract that protects us and ensures a fair and equitable workplace for everyone in our unit,” senior technology reporter Katie Notopoulos said in the story. “It’s been years — it’s time for BuzzFeed to get serious at the bargaining table. We are.”
BuzzFeed last month reported a third-quarter financial performance where revenue increased by 20% to $90.1 million, driven by a 39% improvement in ad revenue. The company’s content-marketing revenue decreased 4% to $26.5 million, while commerce-related revenue increased by 14% to $13.4 million. The company’s net loss was $3.6 million, and adjusted EBITDA more than doubled to $6 million.