Vivek Ramaswamy announces stake in BuzzFeed, sending BZFD shares soaring
- Presidential aspirant Vivek Ramaswamy owns 7.7% of BuzzFeed.
- BZFD stock gains as much as 82% on Wednesday.
- Ramaswamy started buying BuzzFeed stock in mid-March.
- Wall Street maven says stock is 'undervalued', wants to meet with board.
A filing with the Securities & Exchange Commission (SEC) shows that Vivek Ramaswamy, former pharmaceutical entrepreneur and recent Republican presidential candidate, now owns 7.7% of BuzzFeed (BZFD), an early millennial news and listicle site that garnered a heavy following a decade ago but has since fallen on hard times.
The penny stock blasted off at Wednesday's open to an intraday high of 82% at $4.56 but has since retreated to the vicinity of a 20% gain in the late morning session.
US indices are mixed in the midweek session as most stock traders are sheepish ahead of the earnings season’s most-watched release — Nvidia’s fiscal Q1 results that arrive after Wednesday’s market close. A miss by the leading maker of AI chips would send the entire market lower, while a positive beat-and-raise result should send markets roaring into the summer months.
Buzzfeed stock news
Ramaswamy’s 13D filing shows that he has purchased 2,723,927 shares of BuzzFeed, which is a shadow of its former self after laying off more than 180 employees circa April 2023 and shutting down its major news operation in order to focus on its Huffington Post platform.
Between March 14 and May 21, or Tuesday, Ramaswamy purchased the shares between $1.47 and $2.51. Additionally, he owns 2,100 call options, all with a strike price of $2.00, with expirations ranging between mid-June of this year and January of 2025.
Ramaswamy's 13D filing with the SEC
With shares now trading above $3.00, Ramaswamy is already in profit on the whole of his investment. But Ramaswamy said he wants to meet with BuzzFeed’s board, which might mean he has longer-term aspirations, and called BZFD "undervalued".
The company famous for its viral content has witnessed its share price decline 92% since going public back in 2021.
Vivek Ramaswamy hasn’t been in the news as much of late once he dropped out of the Republican Party’s nominating contest for the 2024 presidential election. The founder of Roivant Sciences, a pharmaceutical company that invests in drug patents, has since thrown his hat in with former President Donald Trump’s campaign for the presidency.
Maybe Ramaswamy is taking his cues from Trump’s own playbook. Donald Trump’s publicly-traded Trump Media & Technology Group (DJT) is up 160% year to date.
Penny stocks FAQs
Originally, penny stocks were any stock that traded for less than $1, i.e. pennies. The Securities & Exchange Commission has since altered the definition to include any stock that trades for less than $5. Penny stocks are typically associated with small companies that have either experienced poor results, sending their share price down, or with companies who dilute their share price by issuing lots of shares over time in order to fund operations or acquisitions.
Some penny stocks trade on respected exchanges, such as the NASDAQ or the NYSE. Examples of these are Mullen Automotive (MULN) and Bark (BARK). Those exchanges have requirements though. For the NYSE, listed stocks must have 1.1 million publicly traded shares outstanding with a market value of at least $40 million. The NASDAQ requires a share price minimum of $4, a minimum of 1.25 million shares and a market cap of $45 million. Most penny stocks, however, trade on the OTC (over-the-counter) market. This may mean the OTC Bulletin Board or the privately-owned OTC Markets Group.
Quite often the sharpest movers on any normal trading day are found among penny stocks. This is because non-penny stocks tend to have more liquidity, and the market is more certain about larger companies’ long-term values. Penny stocks are illiquid, meaning there is little supply available if an announcement drives more buying demand into a particular stock. There are no market makers that hold large amounts of penny stocks just to dispense them at a slightly higher price point. Additionally, most of these penny stocks suffer from a news desert where few market players know anything relevant about them. This is why a small biopharma company can issue news about a successful drug trial and immediately rocket 500% higher, with no analysts on Wall Street covering it.
Typically, the answer is “No”. Penny stocks are more risky than higher-priced stocks on average. Penny stock investors have a higher chance of losing their capital by investing in weaker companies. There is a reason why they are penny stocks in the first place, which is that largely the mainstream market is not interested in investing in them. Two groups of investors tend to focus on penny stocks, however. The first group are day traders, who know that the lack of liquidity in penny stocks could lead to extremely large swings over a short time period. The other group is made up of investors who like the fact that these stocks are disregarded. This allows these investors to gain an advantage by benefiting from upcoming announcements, because the larger market is not paying attention.
BuzzFeed stock forecast
Ramaswamy's endeavor reminds one of the ambitious Ryan Cohen, who invested in GameStop (GME) and other meme stocks and now runs the videogame retailer from the position of CEO.
Ramaswamy might just see BuzzFeed as a distribution channel to keep his name in the news if he intends to run for president again. However, Ramaswamy has shown a keen eye for profiting off his many investments before, and his stake absolutely lends credibility to BuzzFeed stock in the short term.
BZFD stock daily chart
The worrisome aspect of the daily candlestick from Wednesday is that the BZFD share price sank almost all the way back to Tuesday's close at $2.50 before bouncing up for a fresh rally. BZFD stock should continue to be quite volatile for the rest of the month, but with a market cap beneath $100 million, it would be unsurprising if shares decide to skyrocket once again.
BuzzFeed is already trading at a one-year high, and a move to $10.00 is absolutely in the cards for the simple reason that BuzzFeed could become the newest meme stock.
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
