- Digital media company BuzzFeed began trading on Monday, closing down 11%.
- Former staffers complained of delays and confusion in converting their options into shares.
- “Covering startups, I’m not surprised to see first-day volatility,” said BuzzFeed News senior tech reporter Katie Notopoulos.
As BuzzFeed prepared to debut as a publicly traded digital media company, some ex-staffers hoping for a quick payday complained of delays and confusion when seeking to convert their stock options into shares.
Like many startups, BuzzFeed offers stock options as part of employees’ compensation packages, with earlier employees standing to benefit in particular. (Full disclosure: The reporter was an employee of BuzzFeed News from 2017 to 2018 but did not purchase stock options when he left the company.)
Former employees were told by BuzzFeed on December 1 to convert their options via Continental, a third-party transfer agent. The process with Continental takes three to five days, according to the email sent by BuzzFeed’s stock administration team, which was obtained by Insider.
Transferring from Continental to a brokerage account could take an additional few business days, ex-staffers told Insider, effectively closing them out from trading for now.
But some employees have complained of issues when attempting to transfer their options. Two former employees told Insider that Continental operators remarked about the volume of calls from former BuzzFeed employees. One of the former employees said Continental told her there were administrative issues related to the transfer of Class B shares carried by some employees.
A BuzzFeed spokesperson said the company was working with the transfer agent to ensure that conversions happen within the next 24 hours.
As ex-employees scrambled to get their shares, BuzzFeed stock spiked on Monday before swinging back down as much as 31% and closing down 11%.
BuzzFeed warned current employees in a November 15 email that they might experience delays if they tried to exercise their options ahead of the deal close “due to the time required to process your paperwork with the exchange agent and both establish and then activate an E*Trade account.”
However, if staffers waited, BuzzFeed wrote, “We predict, but cannot guarantee, that exercising your newly converted BuzzFeed, Inc. options will allow you to receive and trade BuzzFeed, Inc. shares more quickly post-close,” according to the email.
Current employees are permitted to trade BuzzFeed stock into December, and then they will be locked out until BuzzFeed’s first-quarter earnings are released in May, according to the email.
The performance of BuzzFeed, which acquired Complex Networks as part of the
deal, will be closely watched in the digital media industry as large companies like Vox Media and Vice Media Group weigh their next steps. BuzzFeed’s investors withdrew about 94% of the money raised by the SPAC, The Wall Street Journal reported.
Katie Notopoulos, a senior technology reporter for BuzzFeed News and a longtime employee, said she was not concerned by the stock’s rocky start on Monday.
“Covering startups, I’m not surprised to see first-day
,” she said. “Although I wish today marked my entry into the millionaire class, I see the best possible financial outcome here for me being that BuzzFeed is a healthy company that keeps me employed.”
Former employees were left wondering if BuzzFeed slowed down the process to prevent them from quickly dumping shares.
The spokesperson said BuzzFeed is working to accelerate the process as quickly as possible.
A fun thing about the BuzzFeed IPO is that they’ve made it virtually impossible for former employees to trade their shares on the first day. Almost makes you feel like they see you differently than super-rich major investors but I know that’s crazy talk
— Molly Hensley-Clancy (@mollyhc) December 6, 2021
Two former BuzzFeed employees told Insider they hoped to sell their shares as soon as possible. Another said she would hold on to the stock for a year and then sell.
A fourth said that she would keep some of her BuzzFeed stock. “Jonah is crafty,” she said. “I wouldn’t want to totally bet against him.”