“BuzzFeed plans its [insert year] IPO,” has been a familiar headline for the New York-based media company since 2014. While BuzzFeed CEO Jonah Peretti has never confirmed going public, he has hinted in different instances about going public in the future.
In 2015, Peretti said in an interview that the company is focusing on “building out across multiple different platforms.”
“That will give us a diversification… to allow us to build a big independent company with much more predictability and things that would allow us to be a public company,” said Peretti in report by The Guardian.
The news of BuzzFeed’s 2018 IPO came from Axios, which cites an industry source. While the year 2018 is still far away, it's not too early to look into one of the most dominant media company's possible initial public offering. Because this times, it just might not be a rumor anymore.
Here are three reasons why BuzzFeed may IPO in 2018.
Pressure from Investors
Companies go public to pay back their investors to keep their business going. The Reuter reported that Comcast’s CMCSA NBCUniversal had double their investment last November to $400 million from $200 million.
The more money that the investors put in, the more money (or at least the same) that they look to get back, Recode reported that NBCUniversal included “several safety nets” to guarantee that they will at least makes its money back. In the case of BuzzFeed’s IPO, if the IPO price were below what NBCU paid, then BuzzFeed would have to issue NBCU more shares to make up the difference.
When Twitter’s TWTR CEO Jack Dorsey took his mobile payments company Square Inc. SQ public, the company had to pay back $93 million in a penalty to some investors. Interestingly, Square received a significant increase in funding prior to their IPO, similar to BuzzFeed now.
Whether or not the NBCU’s investment is a push for going public, BuzzFeed has said that it wouldn’t consider going public if the company feels that its price won’t outperform it current value Recode reported.
The digital media company not only has its content providers in its large BuzzFeed Motion Pictures studio in L.A., but it also has foreign correspondents across the globe and hires investigative journalists for major stories.
BuzzFeed split itself into separate news and entertainment division to provide a balanced and clearer cut between covering hard news like politics and wars, and lighter fare like social media, entertainment, and lifestyle news. The media-tech company currently has more than 18 offices and 1,300 employees globally. It is not a small operation.
With an IPO, the company could scale even faster and bigger. The funding could help BuzzFeed acquire other content studios and journalists to focus on their online video and produce quality articles.
Working On Being An Independent Company
The leadership teams of BuzzFeed have mentioned multiple times on their desire to operate as an independent company.
“Jonah (Peretti) would like to continue to operate as an independent company, he’d said that a bunch of times,” said BuzzFeed Chairman Ken Lerer at the Tech Crunch Disrupt New York conference. “So that might mean a different kind of exit or cash out than selling to somebody, so you can use your imagination there.”
It's not because no one wants to buy the company either.
In 2014, Disney DIS tried to buy BuzzFeed for $500 million. BuzzFeed rejected by raising its valuation to $1 billion, which was more than what Disney was willing to pay.
According to Fortune, a BuzzFeed spokesperson said that BuzzFeed is not in talks with any companies and “is focused on becoming a big, independent company,” shortly after the story was released.
Whether BuzzFeed goes public or not, there is no question that the company is a powerhouse in the news and media industry. Its content generates seven billion views each month and 200 million monthly visitors according to DMR. If the company does shoot for an initial public offering in 2018, then investors should expect an SEC filing to happen this year.
The ticker symbol “BUZZ” has yet found a home and BuzzFeed could want to snatch it before others do.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Walt Disney Company (The) (DIS): Free Stock Analysis Report
Square, Inc. (SQ): Get Free Report
Twitter, Inc. (TWTR): Free Stock Analysis Report
Comcast Corporation (CMCSA): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research