After going on an ill-advised shopping spree that saw it gobble up the Huffington Post and Complex, it appears Buzzfeed is being forced to tighten the belt, the latest signal that the company's last-ditch effort to spend its way to profitability is backfiring.
As Axios reported Tuesday, the company is under serious financial pressure after high levels of redemptions by investors. The firm's journalists greeted Buzzfeed's post-SPAC debut with a walkout, and looking back, it's too bad the company doesn't have any business reporters to lecture management on the pitfalls of SPAC financing - though its rivals did try to warn them.
Investor redemptions have occurred concurrently with a massive and broad-based drawdown in shares of (mostly unprofitable) companies that went public via the SPAC route.
The drawdowns are particularly troubling for Buzzfeed because the share price is its stock in trade, and without a robust valuation, Buzzfeed CEO Jonah Peretti's planned-for buying binge can't continue.
So, if Buzzfeed doesn't find a way to turn things around today, not tomorrow, and - more importantly - convince investors to buy in, it's in real trouble. For now, the result is cutbacks: the company has reportedly frozen hiring for all but "essential" positions. And it's pretty hard to grow if you can't hire anybody.
Hilariously, Peretti tried to blame the company's losses as the result of his acquisition-focused strategy, and blamed "integration"-related troubles. Bizarrely, he also found a way to blame "supply chain issues". Apparently, "commerce" is now an important part of Buzzfeed's business.
What's worse is that some of Buzzfeed's investors were apparently taken aback by the news. One told an Axios reporter that it "[didn't] track with anything else we have been told."
Shares of the company have barely budged off their all-time post-debut low below $4 a share.
Turns out, Buzzfeed employees have plenty to complain about. Many are stuck with shares they currently can't sell, and some who joined before it became a unicorn are even underwater on their investments in the firm, according to Axios. Buzzfeed has yet to release quarterly earnings, or even set a date for release of its first round of financials as a public company.