- Having ChatGPT write BuzzFeed articles won’t be as lucrative as investors think, Bank of America said in a note.
- The media company said it would use artificial intelligence technology to help produce content, sending its shares soaring 200% last week.
- Bank of America maintained its underperform rating on the stock with a price target of $2, about 4% below current prices.
Having ChatGPT write BuzzFeed articles could reduce some costs for the struggling media company, but it won’t be as profitable as investors think, Bank of America warned in a note Wednesday.
Analysts point to the media company’s recent announcement that it will use OpenAI’s artificial intelligence technology to produce content for its website.
The announcement, along with a recent $10 billion deal with Meta aimed at bringing more creators to Facebook and Instagram, sent BuzzFeed shares soaring 200% last week.
But while artificial intelligence technology could help BuzzFeed cut some of its costs, analysts said of the recent move, it’s not the money-saving solution investors might think.
“While we weren’t surprised by the stock appreciation in these two news stories, we were surprised by the magnitude of the increase. We don’t think the partnership with Facebook represents a 23-year incremental revenue opportunity. … ..while the BZFD is only experimenting with AI in its early stages, it may take time for this to become a material driver of engagement/monetization,” the note said.
ChatGPT has sparked investor frenzy in recent weeks as the much-hyped bot has proven it can spit out relatively complex text for artificial intelligence tools.
Meanwhile, BuzzFeed has struggled financially in recent years, with its stock price down 80% in 2022 due to high inflation, rising interest rates and other macroeconomic headwinds. The company is one of many laying off workers amid economic uncertainty, laying off 12% of its workforce in December.
While analysts see the recent announcement as a “positive validator” of BuzzFeed’s position in the market, they maintain an underperform rating on the stock with a price target of $2, about 4% below current prices.