BuzzFeed shares fell in their first day of trading, a sign investors are wary of the digital media company after a shaky lead-up to its public debut.
The stock, which trades on the Nasdaq under the ticker symbol BZFD, was down 12 per cent at 11:15am in New York, after surging earlier in the day. Shares had closed at $9.62 on Friday.
Founded in 2006, it is the first of today's large online publishers to go public. BuzzFeed, originally known for its topical quizzes, endured a rocky start before hitting the stock market.
In a press release on Friday, BuzzFeed said it had finalised a merger with 890 5th Avenue Partners, a special purpose acquisition company (SPAC), which aims to raise funds through an initial public offering to acquire an existing company.
The company planned to raise $288 million in cash through the merger, but most of the SPAC investors chose not to participate in the transaction.
That’s left BuzzFeed chief executive Jonah Peretti with just $16 million of the originally intended funds.
As of last week, BuzzFeed is worth $1.5bn - a drop-off from the $1.7bn valuation investors gave it four years ago, according to Vox Media.
Mr Peretti said he expected investors would pull their money out because the market for SPACs has cooled.
It “won’t meaningfully change our strategy,” he said, noting that BuzzFeed will still have money raised from a $150 million convertible note that’s part of the transaction. As a public company, BuzzFeed can also use its stock as a currency to buy other businesses, he said.
Mr Peretti said BuzzFeed likely would have done an IPO if the pandemic hadn’t disrupted its business. He called the SPAC “a means to an end.”
Last month, BuzzFeed said its third-quarter revenue grew 20 per cent, helped by an improvement in advertisement sales. But it also saw a slowdown in sales of goods, citing supply chain issues, and it expects that continue in the fourth quarter.
BuzzFeed sells, among other things, a line of cookware at Walmart named after its food brand Tasty. The business is seen as a way for BuzzFeed to rely less on advertising.
BuzzFeed's public debut comes a week after its employees staged a walk-out to protest what they claim is the company's failure to agree to a fair labour contract.
As part of the 24-hour walkout, union members for the company's Pulitzer-prize winning news division demanded an increase in wages and in creative control.
“It’s a negotiation and it’s hard and there’s disagreement around points,” Mr Peretti said of the walkout. “The bargaining table is where they wanted to have those conversations, so that’s where we’re having them.”
The union walk-out was planned on the same day BuzzFeed finalised a deal to acquire Complex Networks, a media company jointly run by Verizon and Hearst.
"We've been bargaining our contract for almost two years, but BuzzFeed won't budge on critical issues like wages — all while preparing to go public and make executives even richer," the news union tweeted.
Negotiations are expected to resume on Tuesday.
Agencies contributed to this report