Shares of BuzzFeed fell by over 5% on Tuesday following news that the company would seek shareholder approval for a reverse stock split. The media company is struggling to survive and has taken the step to avoid being delisted from the stock market. Its share value has plummeted to just 38 cents as of this writing, which is below the minimum $1 bid requirement for Nasdaq listing.
In a reverse stock split, the number of existing shares of stock is consolidated into fewer shares. The company’s total market value remains the same, but the price per share is higher. With the latest step of the reverse stock split, BuzzFeed is hoping to boost the price of its shares.
The media company seeks approval for a reverse stock split that would range from 1-for-2 to 1-for-25. Investors will vote on several matters at the upcoming shareholder meeting on April 25, including a request to consolidate outstanding stock shares. If investors approve the measure, the company will determine the ratio of its reverse stock split. The company mentioned in its latest filing that a reverse split will be implemented within one year if it’s approved.
BuzzFeed has struggled since it went public in 2021 via a merger with a special purpose acquisition company (SPAC). Once known as a pioneer of modern journalism, BuzzFeed couldn’t keep up with the pace and had to shut down some of its brands last year.