what happened
Stocks in digital media companies buzzfeed (BZFDMore 157.18%) We are having our best trading day ever. As of 1pm ET, BuzzFeed’s stock was up 124% and continues to climb even after reports of a partnership with the company surfaced. meta platform.
So what
according to wall street journal, Meta has partnered with BuzzFeed to create content in a deal reportedly worth millions of dollars. And according to BuzzFeed founder and CEO Jonah Peretti, the company plans to work with OpenAI, the creator of ChatGPT, to make its content more relevant to its audience.
For reference, about half of BuzzFeed’s revenue comes from ads placed on digital content. And this revenue stream grew only 11% year over year in his first three quarters of 2022.
However, BuzzFeed’s content revenue grew 58% year over year over the same period. Content revenue is branded content that BuzzFeed creates on behalf of its customers, and the deal with Meta is likely something like that.
It will be interesting to see exactly how BuzzFeed incorporates the use of artificial intelligence into its content creation strategy. For additional context, the company laid off his 12% of its workforce in December.
So
BuzzFeed’s stock price may have jumped significantly because expectations for the company were so low until today. According to Yahoo Finance, the stock is trading at less than half of its book value, suggesting the market puts low odds on BuzzFeed’s long-term viability as a business.
It’s unclear how much BuzzFeed will grow in the future thanks to a new deal with Meta, or if it will become more efficient with fewer workers and more reliance on AI. However, expectations for this company seemed to have been too low, and today’s news sounded alarm bells in that regard.
Going forward, it’s up to BuzzFeed to prove to the market that BuzzFeed can sustainably generate revenue and grow. Results for the fourth quarter of 2022 are expected to be announced next month.
Randy Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platform CEO Mark Zuckerberg, is a member of the Motley Fool’s board of directors. John Quast has no positions in any of the stocks mentioned. The Motley Fool has a position on and endorses the Meta Platform. The Motley Fool’s U.S. headquarters has a disclosure policy.
