After Buzzfeed Inc. (NASDAQ: BZFD) laid off 12% of its staff and reaffirmed its fourth-quarter guidance, shares of the online media company dropped to $0.95. They have a 52-week high of $6.37.
[in-text-ad]
In the most recently reported quarter, the effects of the shaky advertising market were already on display. BuzzFeed lost $27 million on revenue of $104 million. The company ended the quarter with $59 million in cash and cash equivalents.
BuzzFeed went public via a SPAC a year ago. In the few weeks after that, people bought the stock on the open market for over $5 a share. Due to BuzzFeed’s early quarterly financials, the shares were at $2 by June, so early investors lost 60% of their money.
What are the odds of recovery? In the next year, almost nil. A recession will keep advertising revenue across most media low. This already has shown up in the results of larger media companies, from Gannett to Paramount. BuzzFeed’s only path to profitability is ongoing cost cuts. In this, it can follow Gannett’s lead. Gannett fired several hundred employees last week as newspaper advertising faltered.
BuzzFeed is fortunate that it has a large portion of its revenue from creating custom content for other companies. This represented $38 million of its $104 million in revenue last quarter. It remains to be seen if the recession affects this business as much as it does advertising dollars.
24/7 Wall St.No readily accessible database shows how many stocks that drop under $1 stay below that level permanently and how many recover. BuzzFeed is on the edge of profitability. Its ability to keep revenue at levels the same as last year is a major challenge. That leaves it with a modest cash balance to ride out a brutal storm, with its only real leverage being a head count reduction. For the stock to trade well above $1 will need an economic recovery. It has run low on costs to cut.
The Average American Is Losing Momentum On Their Savings Every Day (Sponsor)
If you’re like many Americans and keep your money ‘safe’ in a checking or savings account, think again. The average yield on a savings account is a paltry .4%1 today. Checking accounts are even worse.
But there is good news. To win qualified customers, some accounts are paying more than 7x the national average. That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn a $200 bonus and up to 7X the national average with qualifying deposits. Terms apply. Member, FDIC.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.