BuzzFeed shares fall 41% as investor lockdown expires

Shares of BuzzFeed Inc. fell 41% on Monday, shortly after a ban was lifted preventing executives and major institutional investors from selling their shares.

The fall was the worst percentage drop in the digital media company’s short trading history, and its market capitalization has now shrunk by more than three-quarters since its December debut. BuzzFeed went public through a merger with special purpose acquisition company 890 5th Avenue.

A BuzzFeed spokesperson attributed the volatility to the lockout period, which he said expired on June 1. He said the company has a very low “float” and few owners of its shares, which makes it susceptible to extreme swings when major investors sell.

Major BuzzFeed shareholders include Comcast Corp.

-owned by NBCUniversal, venture capital firm New Enterprise Associates and media conglomerate Hearst Corp., according to a filing in April. NBCU declined to comment, and Hearst and New Enterprise Associates did not respond to requests for comment.

Many companies that go public have a lock-up agreement in place for insiders preventing them from selling their shares until the end of a designated period. Such a move is usually meant to reassure investors that at least initially, there won’t be large new blocks of stocks coming to market that could harm the stock price.

Companies often see their stock prices drop after the lockdown expires. Facebook shares,

as Meta Platforms Inc., fell more than 6% in August 2012 as shares held by early investors became available for trading. Shares of electric truck startup Nikola Corp.

lost almost 15% after an investor lock-in period expired in December 2020.

BuzzFeed has grown in recent years through its acquisitions of — and Complex Networks, and the company was looking to raise money for future deals by going public. BuzzFeed ended up raising far less money than expected from its IPO after 890 5th Avenue suffered a wave of investor withdrawals, The Wall Street Journal reported in December.

Write to Patience Haggin to [email protected]

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Appeared in the print edition of June 7, 2022 under the title “BuzzFeed shares plunge 41%”.

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