BuzzFeed shares jump over 6% amid news of journalist job cuts
- BuzzFeed's share price closed about 6.5% higher on Tuesday.
- The digital news company posted its first set of earnings after going public in December.
BuzzFeed's share price closed over 6% higher on Tuesday amid news that the digital media company was cutting jobs.
The announcement followed BuzzFeed's first release of earnings after the company went public in December.
BuzzFeed said it was laying off about 1.7% of its workforce, Insider's Steven Perlberg reported, citing a memo from CEO Jonah Peretti. The cuts came from BuzzFeed's admin and business units as well as BuzzFeed's video team and Complex's editorial staff. BuzzFeed acquired Complex Networks, a youth-focused media company, as part of its SPAC deal to go public in December.
BuzzFeed also announced it was offering voluntary buyouts to staff members in its news division. The buyouts would be extended to any staff member on its investigations, inequality, politics, or science desks who has been in service for at least a year, Perlberg reported, citing a separate memo from the interim newsroom leader Samantha Henig, who replaced BuzzFeed News' editor in chief Mark Schoofs. BuzzFeed won its first Pulitzer Prize last year.
BuzzFeed News, which has 100 staff members, loses about $10 million a year, CNBC reported, citing people familiar with the matter. CNBC reported that the losses at BuzzFeed's news division had spurred several major shareholders to urge Peretti to shut down the entire newsroom. One shareholder told CNBC that closing down the news operation would add up to $300 million in market value to BuzzFeed.
Schoofs, who stepped down Tuesday, said in a memo that BuzzFeed News would become smaller, Perlberg reported.
"The next phase is for BuzzFeed News is to accelerate the timeline to profitability and undergo a strategic shift so that we will get there by the end of 2023. That will require BuzzFeed News to once again shrink in size," Schoofs wrote in the memo obtained by Insider. "We hope to reduce our size through voluntary buy-outs, not layoffs."
"The amount of buy-outs on BuzzFeed News is currently being negotiated with the union, which reporters are a member of," BuzzFeed told Insider in an email.
BuzzFeed made its debut on the Nasdaq on December 6 and closed 11% lower on its first day of trading. Its shares closed about 6.5% higher at $5.27 on Tuesday.
Despite the company's lackluster performance on the stock market, BuzzFeed's market capitalization — about $702 million — is still about 5% higher than that of the newspaper publisher Gannett, which is $665 million.
"That suggests that even with financial hiccups, the market prefers an all-digital media company to one still making a transition from print," Rick Edmonds, a media business analyst at the Poynter Institute, wrote Tuesday.