Feb 1, 2022 - Economy

Scoop: BuzzFeed limits hiring after rough public debut

BuzzFeed stock price
Data: Yahoo Finance; Chart: Axios Visuals

BuzzFeed is limiting hiring to only critical positions, and will not be adding any new jobs unless there's a business-case justification, CEO Jonah Peretti told staff last week.

Why it matters: BuzzFeed is under pressure to preserve cash after a high level of redemptions from SPAC investors ahead of its IPO merger in December.

  • BuzzFeed raised only around $16.2 million of investor cash in its IPO, alongside $150 million of debt.
  • The company also lowered revenue guidance for the full year in 2021, citing a slowdown to its retail business, per a regulatory filing.
  • Without growing its profit margins, the company won't as easily be able to afford future acquisitions, which Peretti has noted are a key part of the company's long-term growth and vision.

Details: Peretti blamed the economy, as well as the integration of Complex Networks into the company, for the decision, according to messages seen by Axios.

  • BuzzFeed was initially projecting around $95 million in revenue from commerce sales for 2021. It's now projecting a high-teens percentage increase in commerce sales year-over-year, as opposed to 60% year-over-year, due to pandemic-related supply chain issues slowing retail sales.
  • The integration of Complex Networks is likely to result in the consolidation of the two companies' administrative functions. BuzzFeed named Complex Networks chief Christian Baesler as its new chief operating officer in January.

Between the lines: Axios spoke with staffers who said a hiring slowdown caught them off-guard, especially after months of the company touting ambitious growth plans.

  • The hiring slowdown is meant to preserve cash, per a source familiar with the effort.
  • Some said it felt like another major signal that the company's SPAC IPO wasn't going as well as planned.
  • "It didn’t track with anything else we’ve been told recently," one person said.
  • It's unclear how long the hiring slowdown will last.
  • BuzzFeed declined to comment.

Yes, but: Most media companies saw their stocks decline amid a broader market sell-off in January.

The big picture: The hiring slowdown is another stress point for employees who had to deal with a rocky start to the company's long-awaited IPO.

  • Ex-employees were unable to sell their sinking shares when BuzzFeed first began trading as a public company. Some employees who joined the company even before it became a "unicorn" were put underwater.
  • Members of BuzzFeed News' union planned a virtual walkout the same day shareholders voted on whether to take BuzzFeed public via a SPAC IPO. Sources say negotiations between the union and management are ongoing.

What to watch: BuzzFeed has yet to report its first-ever earnings results as a public company. It has yet to set an earnings release date.

Bottom line: It's a tough time to take a company public, especially via a SPAC.

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