Buzzfeed May Need $50 Million

Buzzfeed Inc. (NASDAQ: BZFD) posted an ugly fourth quarter, but its forecast for the first quarter of this year was much worse. For the final quarter of last year, revenue dropped 8% to $135 million. Its loss was misleading at $106 million, of which $102 million was a goodwill write-off. Adjusted EBITDA, a better sign of financial health, was almost $18 million, about half the amount of the same quarter a year ago. (These companies are planning mass layoffs this year.)
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The tough news was “We expect Adjusted EBITDA losses in the range of $18 million to $25 million.” Revenue is expected to be $62 million to $67 million. Cash on hand at the end of last year was $55 million. It will not take many quarters like the first one before Buzzfeed needs more money, which could be as high as $50 million. This may not be easy to raise. Buzzfeed has a market cap of $140 million. Using equity to get cash could hammer common shareholders, which may be why its stock is down over 80% in the past year.
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Buzzfeed has done two things to improve its fortunes. The first is to use AI to create some of its articles. It is not clear what the extent of this practice is. Futurism recently reported, “BuzzFeed Is Quietly Publishing Whole AI-Generated Articles, Not Just Quizzes.” There is no independent way to confirm that.
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The other program to produce more stories is to ask writers to write more. According to The Wall Street Journal, BuzzFeed News Editor-in-Chief Karolina Waclawiak said, “But what we can control is how many stories we publish each day.”
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Admittedly, almost every news or written content site in the country faces Buzzfeed’s problem. This includes 24/7 Wall St. LLC, which was founded in 2006.

Buzzfeed is fortunate. Although raising money would be painful for current shareholders, it has a chance to do so. Many companies in the industry do not.