BuzzFeed is now a penny stock. 2 catalysts could change that

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on Jun 16, 2022
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  • BuzzFeed has transitioned from a growth media company to a penny stock.
  • There are concerns about the company’s ad-driven model.
  • There are two catalysts that could push the BuzzFeed stock higher.

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The BuzzFeed (NASDAQ: BZFD) stock price has been in a sharp freefall in the past few months as investors worry about the ad-driven model. The once-storeyed media company has effectively become a penny stock as its shares are trading at $1.79, down from its all-time high of $14.8. Its market cap has crashed to $242 million.

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The rise and fall of BuzzFeed

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BuzzFeed was once one of the most popular media companies in the world. At its peak, it was seen as the future of journalism, which helped push its valuation to billions of dollars. 

As the company’s business grew, it sought opportunities to expand its offerings. It acquired Tasty, a company that is focused on the food niche. It the acquired HuffPost, a website that focuses on political reporting from a liberal perspective. 

BuzzFeed also acquired Complex Networks, a company that focuses on celebrities. At the same time, it launched BuzzFeed News, an operation that has now been scaled down.

According to its 10k, BuzzFeed reaches over $100 million people every month. These people consume over 800 million hours of content, making it one of the leading players in the industry. In the trailing twelve months, BuzzFeed has made over $416 million in revenue and lost $18 million.

The BuzzFeed stock price has crashed as investors worry about the future of digital advertising. For example, we have seen companies like Snap warn about growth of the ad business as many advertisers worry about inflation. There are also concerns about competition from the likes of Snap and TikTok.

Still, there are some positive signs about Buzzfeed now that it has become a penny stock. First, the company has proven that it can become profitable. In 2021, the company eked a profit of over $24 million.

Second, a closer look at data shows that its website traffic is rising. BuzzFeed had over 99.5 million visitors in May while HuffPost users rose to 63.1 million as shown below.

Buzzfeed stats

BuzzFeed stock price forecast

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Buzzfeed stock

The four-hour chart shows that the BuzzFeed stock price has been in a strong bearish trend. The sell-off accelerated when the shares moved below the support at $3.65. It has managed to move below the 25-day and 50-day moving averages. At the same time, oscillators like the Relative Strength Index (RSI) and MACD have moved to the oversold level.

Therefore, there is a possibility that the shares will bounce back in the coming months. If this happens, the next key level to watch is $3.65.

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