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Why Did BuzzFeed Stock Drop 12%?
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Why Did BuzzFeed Stock Drop 12%?

Shares of BuzzFeed (BZFD) fell almost 12% during extended trading on May 16, after the media and entertainment company reported a huge loss for Q1 2022. BuzzFeed went public in December 2021 through a SPAC merger

The company operates three major business units, namely advertising, content, and commerce. Advertising is the largest unit in revenue contribution.

Q1 Numbers at a Glance

Revenue rose 26% year-over-year to $91.6 million. Advertising revenue jumped 26% to $48.7 million; Content revenue increased 65% to $32.3 million; and Commerce revenue rose 27% to $10.6 million.

However, the net loss of $44.6 million widened from a loss of $11.3 million for the same quarter the previous year. BuzzFeed ended the quarter with $74.5 million in cash.

Outlook

BuzzFeed expects its Q2 revenue to grow by at least 20% year-over-year. The company anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be in the range of $2 million to $7 million.

Wall Street’s Take

The stock has a Hold consensus rating based on one Hold. The average BuzzFeed price forecast of $5.50 implies 49% upside potential to current levels.

Hedge Funds 

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in BuzzFeed is currently Neutral, as eight hedge funds increased their cumulative holdings of the stock by 627,300 shares in the last quarter.

Key Takeaway for Investors

BuzzFeed runs businesses with bright prospects. For example, as advertising money is increasingly shifting online, so is media consumption and shopping. To better position itself for the future, BuzzFeed continues to make strategic investments, which weigh on earnings for now.

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