In a lawsuit, 91 former and current BuzzFeed employees allege that the company botched its public offering. But some ex-employees, it turns out, were able to trade while others could only watch the shares plummet. jenwieczner reports
Photo-Illustration: Intelligencer; Photos: Getty Images/BuzzFeed Earlier this month, the staggeringly bad market performance of BuzzFeed managed to get even worse. Shares of the media company fell more than 40 percent on June 6, just days after the expiration of a lockup preventing company insiders from selling their stock.
Hannah Anderson was in her obstetrician’s office early on December 6, the day the stock she had received as part of her compensation package at BuzzFeed was finally going to be worth something. Nearly eight months pregnant with her second child, she was only half listening to the doctor, instead thinking of ways she would celebrate. “I was literally refreshing the CNBC web page while the doctor was going over the signs of labor with me,” she says.
One former staffer took a pay cut and a less prestigious title simply to join BuzzFeed. She told me, “I remember talking to HR and saying, ‘Is there any wiggle room in the salary?’ And they were like, ‘Absolutely not, but think of all the benefits,’ and they talked about the stock. There was always the hope that this could be a huge payout at some point.”
One special feature of SPACs is that they allow initial investors to cash out their shares at $10 before a merger goes through. With BuzzFeed, 94 percent of eligible investors redeemed their shares — one of the highest redemption rates of all SPACs that went public last year, according to SPACInsider, which tracks those deals. “I definitely felt a sense of impending doom about that,” says someone who worked as a reporter at BuzzFeed in its early days. That feeling would intensify.
The explanation was strange for several reasons. First, one of the former employees had received a message last July from a BuzzFeed lawyer that included a document to sign to convert the shares — seeming to suggest the company had been aware of the requirement much earlier. The email referenced a conversation with Jonah Peretti, BuzzFeed’s CEO, and went on to say, “Please note that Class A common stock are the shares that are anticipated to be publicly listed.
Continental, for its part, told Axios in December that it was “sensitive to the shareholders’ inability to sell before the share price sank,” but it blamed the issues on the “timing of the records” and “directions” it had received from BuzzFeed and its lawyers.
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