Complaints filed by 77 former and current BuzzFeed Inc (NASDAQ:BZFD) employees say the company mishandled the public launch of its stock, leading to a significant loss in the value of their shares.
What Happened: Two claims were filed before the American Arbitration Association by employees of the company who altogether more than 900,000 shares of BuzzFeed stock when it went public.
The $8.7-million compensation claim comes as the stock is now trading almost 60% down from its I.P.O. price
Why It Happened: BuzzFeed announced its plans for a merger with a special purpose acquisition company, 890 Fifth Avenue Partners, in June 2021. The deal valued BuzzFeed at $1.5 billion.
When the merger was finalized in December, the company lost over $250 million raised by the SPAC as investors withdrew their money. BuzzFeed was left with only $16 million, but company officials decided to proceed with the IPO, going public on Dec. 6, 2021.
The stock quickly plummeted once trading began, falling to the $5 range by the end of December.
In the claims, employees say they were unable to quickly sell their shares as the stock was dropping. The BuzzFeed workers say they had not been told extra steps were necessary to convert their Class B shares before they could be sold.
Due to the confusion, the employees were unable to sell their stock for several days, as the price was tanking.
BuzzFeed has denied the allegations, saying, "there is no merit to the claims' outlined in the complaints."
BZFD Price Check: Buzzfeed shares were trading 1.08% higher at $4.69 ahead of the close Wednesday.
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Photo: Courtesy of Scott Beale on Flickr
