BuzzFeed stock price analysis: can this fallen angel be saved?

Buzzfeed (NASDAQ: BZFD) stock price has suffered a harsh reversal as investors reflect on the decision by Vivek Ramaswamy to invest in the company. It initially soared to a high of $4.55 but has now tumbled by over 41%, giving it a market cap of over $97 million.

Can Vivek Ramaswamy turn around BuzzFeed?

Buzzfeed, once a leading player in the digital media company, has become a fallen angel as its growth and relevance fade. As a result, it has been implementing a turnaround strategy that included exiting key markets and layoffs.

The most recent financial results showed that the company’s business continued slowing down in Q1. Its advertisement revenue came in at $44.8 million, a 18% drop from the same period in 2023. Its content and commerce revenues dropped by 19% and 9%, respectively to $13.1 million and $10.2 million, respectively.

Most importantly, there are signs that users are no longer spending a lot of time on its websites as the total time spent dropped by 16%. Worse, the company expects that the meltdown in revenues to continue in the second quarter. It sees the revenues falling by 21% to between $44 million and $49 million.

Therefore, the BuzzFeed stock price rose late last month after Vivek Ramaswamy invested in the company, becoming one of its biggest shareholders. He has pushed for more changes, especially on its content strategy.

I believe that turning around the company is difficult for several reasons. First, the digital advertising market will likely continue facing challenges as brands opt for other forms of marketing, including social media and search engine. 

Second, the company’s website’s traffic is falling. Data by SimilarWeb shows that the website’s traffic dropped to over 82.7 million, down from over 86.29 million in March. Most of these users come directly to the site while 28% are from search engines. BuzzFeed’s content is hard to find on Google, which is a big issue.

Third, most young people are spending a lot of their time on Instagram and TikTok. Reaching this demographic will be tougher to implement in the future even with Vivek’s magic.

Further, the new media industry is more difficult to crack as we have seen with companies like Vice Media, The Messenger, and Sports Illustrated. Even many well-known brands like Washington Post, Business Insider, and Wall Street Journal have struggled and announced layoffs recently.

BuzzFeed stock price analysis

BZFD chart by TradingView

The BZFD share price has suffered a harsh reversal in the past few days after peaking at $4.55. It has plunged below $3 and slipped below the support level at $2.78, its highest swing in August last year. This retreat happened after the company formed an evening star candlestick pattern.

On the positive side, it has remained above the 50-day and 100-day Exponential Moving Averages (EMA). However, the two lines of the MACD have formed a bearish crossover while the Relative Vigor Index (RVI) has pointed downwards.

I suspect that the stock will continue falling as sellers target the crucial support at $2.00. A move above the resistance point at $3.5 will invalidate the bearish view.