Buzzfeed shares jump over 6% amid news of journalist job cuts

Business Insider US
BuzzFeed announced job cuts as it posted its first set of earnings as a publicly listed company. Brendan McDermid/Reuters
BuzzFeed announced job cuts as it posted its first set of earnings as a publicly listed company. Brendan McDermid/Reuters

  • 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 announced company-wide job cuts and offered voluntary buyouts for its news division.
  • BuzzFeed's share price closed over 6% higher on Tuesday amid news that the digital media company was cutting jobs.
  • For more stories visit Business Insider.

The announcement followed BuzzFeed's first set of results after the company went public in December last year.

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 had 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 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 interim newsroom leader Samantha Henig. 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. The losses at BuzzFeed's news division have spurred several significant shareholders to urge Peretti to shut down the entire newsroom, according to CNBC. One shareholder told CNBC that closing down the entire news operation would add up to $300 million in market value to BuzzFeed.

News Editor-in-Chief Mark Schoofs said in a memo that BuzzFeed News would become smaller, Perlberg reported. Schoofs also announced he was stepping down on Tuesday. 

"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," wrote Schoofs in the memo obtained by Insider. "We hope to reduce our size through voluntary buy-outs, not layoffs."

BuzzFeed did not immediately respond to Insider's request for comment.

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 its lackluster performance on the stock market, Buzzfeed's market capitalization — currently around $702 million — is still about 5% higher than Gannett's at $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," wrote Rick Edmonds, media business analyst at the Poynter Institute on Tuesday.

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