BuzzFeed (BZFD) stock more than doubled on Tuesday after media mogul Byron Allen’s family office agreed to acquire a 52% majority stake in the news and entertainment company.
The $120 million lifeline comes at a critical juncture, with Allen set to replace founder Jonah Peretti as chief executive by the end of May.
At the time of writing, Buzzfeed shares are trading at a year-to-date high of about $1.60.
Why Byron Allen News Is Bullish for BuzzFeed Stock
Investors are cheering the Byron announcement as it provides an immediate liquidity infusion ($20 million in cash and a $100 million promissory note), effectively pulling BZFD back from the brink of bankruptcy.
Allen’s proven track record with Allen Media Group signals a pivot toward high-margin streaming video, audio, and user-generated content.
Meanwhile, Jonah Peretti will now serve as President of BuzzFeed AI, helping the company to double down on high-growth tech initiatives.
BuzzFeed’s deal with Allen values BZFD shares at $3 each, a meaningful premium on their previous close, which signals strong confidence in the company’s “sum-of-the-parts” value.
Why BZFD Shares Still Aren’t Worth Owning
Beyond the headline excitement, however, BuzzFeed shares remain rather unattractive for long-term investors.
For starters, even after the explosive surge on May 12, they continue to hover around the $1.60 level, which means the delisting risk is still very much on the table.
Meanwhile, financials remain dismal as well; Q1 revenue plummeted over 12% year-over-year to $31.6 million while net losses widened to $15.1 million.
In April, BZFD missed a $5 million debt payment, highlighting an overly stressed balance sheet.
With advertising revenue down some 20% and heavy reliance on a restructuring plan that involves spinning off valuable assets like Tasty, BuzzFeed’s path to profitability remains elusive and fraught with execution risk.
Most importantly, BZFD is a penny stock — a category of equities notorious for unusually high volatility and pump-and-dump behavior.
BuzzFeed Doesn’t Receive Broad Wall Street Coverage
Another major red flag on BZFD stock is the absence of broad Wall Street coverage.
As of writing, the only analyst who covers BuzzFeed currently rates it a “Hold” with a price target of $1, indicating potential downside of more than 35% from here.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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