The rumor mill is buzzing about a potential stock offering next year by BuzzFeed, the digital-first media venture that was started by Huffington Post co-founder Jonah Peretti and is backed by Comcast subsidiary NBCUniversal. But an IPO would likely be far from a moonshot.
Some of the more recent IPO talk—fueled in part by a report from Axios writer Mike Allen, whose company shares an investor with BuzzFeed—was likely sparked by the response to Snap Inc.’s recent public offering. The video-messaging company’s shares (SNAP) have faltered somewhat since the issue, but it still managed to sell $3.4 billion worth of stock.
BuzzFeed, however (or at least certain insiders close to the company) has been hinting at a possible share issue since last fall, when Recode and the Wall Street Journal both reported that the company was considering going public in 2018.
There’s no question that some of BuzzFeed’s financial backers would probably like to see the company do a public offering, since that would allow them to book a return on the investments they have made in the company over the past several years.
Get Data Sheet, Fortune’s technology newsletter.
In its last funding round in November, BuzzFeed raised $200 million from NBCUniversal, an investment that doubled NBC’s stake, giving it about a third of the company. (Lerer Hippeau, another of BuzzFeed’s backers and a former investor in Huffington Post, also has a stake in Axios.)
The hard part for BuzzFeed is that it is not a hot social platform like Snap—with a messaging product that’s used by hundreds of millions of people daily and revenues that are doubling or tripling every quarter. And so investors are not likely to pay as much for it.
Buzzfeed’s last funding round gave it a theoretical value of about $1.7 billion, according to a number of reports. But that valuation was essentially the same as it was when NBCUniversal first invested in 2015, which suggests that the company is not growing quickly—or at least not quickly enough to have become more attractive to its investors.
The bottom line is that BuzzFeed is fundamentally a media company that creates and publishes news stories and videos and listicles on a variety of platforms (including Snapchat) and relies on advertising revenue to pay the bills.
The company has invested heavily in video, and in targeting mobile users, and has shown itself to be more innovative than lots of other publishers, but it is still fundamentally a media company. And investors aren’t crazy about media companies for the simple reason that they don’t grow as quickly or generate as much revenue as technology companies do.
Don’t Trust Twitter When It Comes to Stocks
You could argue that Snap is also a media company, since it relies on advertising revenue, and its business is based on user-supplied content like videos, text, and photos. But the crucial difference for investors is that Snap gets all of its content for free, whereas BuzzFeed has to pay people to produce it.
Snap is expected to have revenues of almost $800 million this year, up close to 160% from last year. BuzzFeed reportedly missed its revenue targets for last year (a report disputed by chairman Ken Lerer, one of the co-founders of Lerer Hippeau) and grew by about 65%.
With a market valuation of $1.7 billion, its backers are assuming that BuzzFeed is worth more than seven times its estimated revenue for last year. In an IPO, they would likely want to see that valuation increase significantly, which means an even higher multiple. That would be awfully rich for a media company that may be having trouble growing.
BuzzFeed and its investors may have other reasons for wanting to go public. But its balance sheet and growth profile aren’t exactly a recipe for a blockbuster Snap-style share issue.
