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(Reuters) – Shares of BuzzFeed Inc jumped over 50% in early trading after a report said Meta Platforms Inc (NASDAQ:META) was paying the digital media firm millions of dollars to bring more creators to Facebook, Instagram.
About 30 million shares changed hands by 9:50 a.m. ET, setting the stock for its busiest session on record and well above its 25-day moving average volume of about 150,000.
As part of a deal reached last year that was valued at close to $10 million, BuzzFeed agreed to help generate content for Meta’s platforms and train creators to grow their presence online, the Wall Street Journal reported, citing people familiar with the situation.
“BuzzFeed was in dire need of cash. This is a case of (Meta) throwing BuzzFeed a bottle of water in the middle of the desert,” said Thomas Hayes, chairman and managing member at Great Hill Capital LLC.
“I wouldn’t make too much of this other than they have more cash today than they did yesterday.”
The $132 million company has seen its shares tank over 90% to just under $1 since going public via a reverse merger with a special purpose acquisition company (SPAC) in December 2021.
Shares of the company were last trading at $1.50.
BuzzFeed is among a list of companies that were hit by a wave of redemptions amid concerns about the economy, with the frenzy for such lucrative dealmaking also fading.
SPACs typically sell shares for $10 each, put the cash in a trust account and then search for a company to buy. Its shareholders can choose to redeem their shares in return for cash.
BuzzFeed said last month it would cut about 12% of its workforce to rein in costs. Its third-quarter net loss had widened to $27 million from $3.6 million a year ago.
