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Media companies encourage employees to work from home as virus spreads – CNN

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A few days ago Matt Pearce of the Los Angeles Times commented that “we are all coronavirus reporters now.” His observation becomes more true each day. The virus crosses every beat, from the obvious ones like health and finance to beats like education, travel, entertainment, and sports. It’s an international story and a local story. It’s a story that requires minute-by-minute live-blogging and investigative reporting. Hurtling home in much-lighter-than-usual traffic Tuesday night, I realized that the impacts of the virus even extend to my wife’s traffic reporting beat…

“Low key slowdown”

Josh Marshall, the founder of Talking Points Memo, commented Monday night that NYC had “already started what might be called a low key slowdown, but done it in a unalarming way.”
That’s exactly what it feels like — a “low key slowdown.” It’s happening gradually, not all at once. It is turning into a full-blown shutdown in some cities and at many colleges and companies. On Tuesday night Marshall pointed out that corporations have led the slowdown: “Private sector (especially white collar private sector) moving ahead at 70mph, universities and private schools 50mph, local govt’s 40mph, federal 20mph.” To that point, he announced that TPM’s offices will be closed “for the foreseeable future. The entire staff, including the editorial, tech and business teams, will begin working remotely tomorrow.

New precautions in newsrooms

At least one person in attendance at last week’s National Institute for Computer-Assisted Reporting conference in New Orleans “has tested presumptively positive for the novel coronavirus, organizers said,” per NOLA.com.
So newsrooms are taking precautions. Per an internal memo, several NYT staffers were at the conference and then returned to the office in NYC and DC, so “out of an abundance of caution, all Times staff members who attended the conference will self-isolate for a two-week period following the end of the conference.” NYT offices are being cleaned by special teams. And staffers in those offices are welcome to work from home.

Working from home

Google “work from home,” and you’ll find numerous columns by far-flung employees and freelancers with advice for the thousands of people who are about to do it for the first time. Case in point, this late-night memo from WarnerMedia, the parent company of CNN: “Based on recent developments in New York… we are encouraging New York-based employees who are able to work remotely, to do so until further notice.” NY offices “remain open for employees who need or want to continue working there, or to pick up their equipment in preparation to work from home.” It’s WFH for short…
— Related: Google wants all of its North America employees to WFH… and The Washington Post encouraged employees “to work from home if possible…”

Cancelled…

Every day brings new impacts to the journalism industry and the broader media business. Here are just a few of Tuesday’s examples:
— ISOJ, one of the world’s foremost journalism conferences, has been cancelled…
— Quibi “has cancelled its launch event in Los Angeles,” per THR…
— Coachella and Stagecoach have been postponed until October…
— Lisa Respers France has a list of other concerts and festivals that have been called off…
— The release of “Peter Rabbit 2: The Runaway” is being delayed by five months…

Shows without studio audiences

Chloe Melas writes: “The Wendy Williams Show” will tape without studio audiences as a coronavirus precaution. “Jeopardy” and “Wheel of Fortune” too. Will other shows follow suit? Yes — expect more of these types of announcements from daytime and late-night talk shows over the coming days…
>> This just in from Yashar Ali: “ABC says all of its talk shows and live shows will be audience free for the time being. This includes the View, Tamron Hall, and Live with Kelly and Ryan…”

On a personal note…

Scores of film and TV screenings have been cancelled in the past week, including “After Truth: Disinformation and the Cost of Fake News,” which I executive-produced. Last week its film festival premiere at SXSW was scrapped along with the rest of the conference. And on Tuesday its New York premiere, set for Thursday, was cancelled by HBO. An email to invitees said “we are taking precautionary measures due to concerns for public health.”
“After Truth” has been in the works for 2+ years and we can’t wait for people to see it. The good news is that it will premiere on TV next week — Thursday, March 19 at 9pm ET on HBO…

“Social distancing” at press briefings

Via Reuters: “The Pentagon says it has adopted social distancing at news briefings and meetings, with reporters sitting several feet apart from each other on Tuesday in a room usually packed with correspondents.” Quite a contrast to the crowded briefings with Mike Pence at the W.H. briefing room…

Shafer: “Make Mike Pence the new W.H. press secretary”

Oliver Darcy emails: Jack Shafer wants to “make Mike Pence the new White House press secretary.” At recent briefings on the coronavirus, Pence “acted less like the ‘coronavirus czar’ and more like a good old-fashioned White House press secretary.” And, Shafer wrote, Pence has “played the role of press secretary as if born to it.”
Shafer wrote, “He was calm. He was direct. He was polite in face of shouted, competing questions. He deferred to the medical and policy professionals on the dais with him.” Shafer added that the Pence briefings “reminded anybody who was paying attention how much value news consumers used to get from them…”

Trump continues to contradict his cabinet

In his words and actions, President Trump is undermining the government’s message. He is shaking hands with strangers while members of his coronavirus task force purposefully bump elbows instead. He is attacking the media while officials rely on the media to get their messages out. And his campaign is scheduling a rally.
Consider what he should be doing, like displaying alternatives to the handshake. Instead of modeling “social distancing” and other best practices, he is engaging in risky action that contradicts his own administration’s experts…

Geraldo tells Trump to stop shaking hands

Geraldo Rivera pointed out Sean Hannity’s unique relationship with Trump on Hannity’s show Tuesday night: “I want you to tell the president, when you talk to him tonight, that Geraldo says ‘Mr. President, for the good of the nation, stop shaking hands.’ It’s a bad example. We don’t need it.” Hannity didn’t object to the baked-in assumption…

How journalists can help

Over the weekend I said that journalists are playing a key role in putting pressure on local and federal governments and exposing flaws in the response. This idea applies to corporations as well. On Monday, Judd Legum wrote in his Popular Information newsletter about restaurant operator Darden and the lack of paid sick leave for employees. Legum’s follow-up: “About 10 hours after the piece published, Darden announced it would provide paid sick leave to all its hourly restaurant employees…”

“How much danger does coronavirus pose to the battered U.S. news industry?”

NiemanLab’s Joshua Benton sees a number of damaging impacts, including live-event cancellations, home newspaper delivery difficulties, and advertising declines. “Recession risk” is “the potentially catastrophic one,” he writes: How will hedge funds “react if their newspapers face a sudden revenue shock — and their once-predictable cashflow becomes a lot harder to pull out? I don’t know! But private equity funds are not known for their humane treatment of companies that have outlived their perceived usefulness. At an absolute minimum, expect another and bigger wave of layoffs. In the worst case, could a coronavirus-aided recession be the thing that leads to the wave of daily newspaper closures people have been anticipating — but not seeing — for the past decade?”

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Four Ontario school boards sue social-media giants for products that harm students' behaviour and education – The Globe and Mail

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Colleen Russell Rawlins, Director of Education with the Toronto District School Board, talks to students at Selwyn Elementary School on Mar 27.Fred Lum/The Globe and Mail

Four of Canada’s largest school boards are suing the companies behind social-media platforms Facebook, Instagram, SnapChat and TikTok, accusing them of negligently designing products that disrupt learning and rewire student behaviour while leaving educators to manage the fallout.

In four separate statements of claim filed on Wednesday in Ontario’s Superior Court of Justice, the Toronto District School Board, the Toronto Catholic District School Board, the Ottawa-Carleton District School Board and the Peel District School Board accused social-media companies of employing “exploitative business practices” and choosing to “maximize profits” at the expense of the mental health and well-being of students.

The addictive nature of social media means that educators spend more classroom time trying to have students focus on their lessons, the boards say in the statements of claim. They say the compulsive use of social-media platforms has also strained limited school board resources: Schools require additional mental health programs and personnel; staff spend more time addressing aggressive behaviour and incidents of cyberbullying; and information-technology services and cybersecurity costs have increased.

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“The Defendants have acted in a high-handed, reckless, malicious, and reprehensible manner without due regard for the well-being of the student population and the education system,” according to the statements of claim.

Similar lawsuits against social-media companies have been filed in the United States in recent months by individual states and school districts. This would mark the first time it’s being done by school boards in Canada.

The four boards filed their lawsuits against Meta Platforms Inc., which is responsible for Facebook and Instagram, Snap Inc., the parent company of SnapChat, and ByteDance Ltd., owner of TikTok.

The school boards are advancing combined claims of around $4.5-billion. They are also asking that the social-media giants redesign their products to keep students safe.

None of the allegations have been proven in court.

In an e-mailed statement, Tonya Johnson, a spokeswoman for Snap, said the platform was “intentionally designed to be different from traditional social-media” so that users could communicate with friends. “While we will always have more work to do, we feel good about the role Snapchat plays in helping close friends feel connected, happy and prepared as they face the many challenges of adolescence,” she stated.

Meta and ByteDance did not immediately respond to requests for comment.

Social-media use by children and young people has been the topic of widespread discussion among parents, policymakers and educators. Earlier this week, Florida Governor Ron DeSantis signed a bill that bans social-media accounts for children under 14 and requires parental permission for 14- and 15-year-olds.

In Canada and elsewhere, there are growing concerns over the role social-media platforms play in cyberbullying, disrupted sleep patterns, brain development, and the inability of young people to focus.

A survey from the Centre for Addiction and Mental Health in 2021 found that 91 per cent of students in Grades 7 to 12 use social media daily, and about a third spend five hours or more daily on it. Researchers surveyed more than 2,000 Ontario students. Almost one-third reported being cyber-bullied at least once in the past year.

In their lawsuits, the four school boards said the companies “knew, or ought to have known, that the deliberate design of addictive and defective social-media products would interfere with students’ access to an education, negatively impact the learning environment, and create a public nuisance within the education system.”

Colleen Russell-Rawlins, education director of the Toronto District School Board, the country’s largest school board, said in an interview on Wednesday that social media has affected the education system in “very significant ways.”

“Students are not present,” she said, describing the addictive nature of social-media platforms. Educators are hearing about more incidents of cyberbullying. They are witnessing the rapid escalation of aggression that starts online. And they are helping students who are coping with anxiety and other mental health challenges.

The lawsuits, she said, are not just about raising awareness, but about protecting children by calling for safeguards and ensuring that school boards have the resources to help address the negative effects of increased social-media use.

“I think there’s no other childhood addiction that’s impacting children’s futures through education that we as educators and leaders would be expected to remain silent about. We feel compelled to act on behalf of our young people,” Ms. Russell-Rawlins said.

Pino Buffone, the education director at the Ottawa-Carleton District School Board, echoed the sentiment, adding that the compulsive use of social media has further strained the finite resources of the school board. Educators and other school staff are being forced to manage behaviour that stems from social-media use.

“It has become clear that we need to hold social-media giants accountable,” Mr. Buffone said.

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Is the US media layoffs phenomenon the next housing crisis?

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In the past few months, the media sector in the United States has gone through one of its worst rounds of layoffs in decades, with some voices within the sector even asking if journalism is a viable career path despite surging subscriptions at publications like The New York Times.

Most recently, outlets like Vice and the sports blog Deadspin were decimated in a massive round of job cuts. Vice ended its online publication, and Deadspin laid off its entire editorial team.

These are the latest in a slew of headcount reductions at countless newsrooms around the US over the past decade at the hands of wealthy owners. The latter overwhelming have the backing of some of the biggest private equity and wealth management firms in the US like Apollo Global Management, Fortress Investment Group and Alden Capital, to name a few. These institutions are also called shadow banks.

A surge in private equity investments in media, experts said, has led to decisions that benefit investors but not always the companies and their employees, similar to the 2008 housing crisis and private equity’s ability to flourish during that time.

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While the media business is in the spotlight now, it is a microcosm of a bigger challenge across the US economy. What makes it stand out is that it’s been a long and high-profile battle.

One such moment came with tech’s control (overwhelmingly led by Meta, then Facebook) in 2018 over audience traffic, which made newspapers, magazines and news portals beholden to the algorithmic choices of social media giants like Facebook and Twitter, which ultimately hurt the sector.

That was an optimal entry point for private equity to get a stronger foothold in the media business.

“Media companies were struggling at the time but not nearly enough as the journalism community was led to believe,” explained Margot Susca, the author of How Private Investment Funds Helped Destroy American Newspapers and Undermine Democracy.

“Funds use these market conditions to justify the gutting of these American institutions,” said Susca, who is also a professor of journalism at American University in Washington, DC.

‘Liquidating the entire industry for profit’

Like in the housing market, financial institutions capitalised on someone else’s misfortune to make money from it. In the 2008 recession, it was lenders and big investment banks ranging from Lehman Brothers to Washington Mutual, a move that ultimately led to their collapse.

The key is real estate. In the housing crisis, banks seized foreclosed homes for pennies on the dollar after homeowners defaulted on subprime mortgages.

In the case of the media sector, shadow banks are going after physical newsrooms and selling them. For instance, in 2018, Gannett sold the headquarters of the Asheville Citizen Times to Twenty Lakes Holdings, a real-estate affiliate of Alden Capital. Gannett sold the building for $3.2m. Alden then sold it to developers for $5.3m.

A comparable move happened at Vice last year. Only months after Fortress Investment Group acquired the publication, it left its office in Brooklyn, New York.

There’s a lot of real estate at shadow banks’ disposal. Private equity, hedge funds and other comparable firms control roughly half of all daily newspapers in the US.

“The problem with the news media sector is not its viability. The problem with the news media sector are these locust funds that are liquidating the entire industry for profit,” Susca said.

But where do shadow banks go once physical assets like real estate have been liquidated?

They squeeze out revenue where they can for as long as they can. That often means cutting staff.

G/O Media, formerly known as Gizmodo Media Group, sold off Deadspin, its sports blog. The new owner, Lineup Publishing, said it would not bring over any existing editorial staffers even though it aimed to “be reverential to Deadspin’s unique voice”, G/O CEO Jim Spanfeller said in an email to employees.

Great Hill Partners acquired the media brand in 2019 and drastically shifted Deadspin’s editorial vision. The publication was a sports-centric one that also housed vibrant cultural commentary on a variety of topics. At the direction of the new owner, the publication was directed to “stick to sports”. The announcement led to mass resignations.

This week, G/O Media sold two more publications from its portfolio — The AV Club and The Takeout.

G/O is not in a financially dire position, according to Spanfeller, who told Axios this year, “We’re not strapped for cash.”

Unionized staff at Condé Nast walk the picket line during a 24-hour walk out amid layoff announcements
Unionised staff at US publishing company Conde Nast walk the picket line during a 24-hour walkout amid layoff announcements in New York City in January [File: Angela Weiss/AFP]

According to the Writers Guild of America East, which includes various unions representing editorial staff from multiple media firms, Great Hill Partners made an estimated $44m in revenue in 2023. The guild suggests that Great Hill Partners has enough money to make decisions that do not undermine the financial security of its staffers.

When Spanfeller was appointed in 2019, the private equity firm said he was a significant investor in the company but did not disclose the specifics of the financial agreement. Spanfeller’s appointment came directly from the firm suggesting that it intended to oversee day-to-day editorial operations across G/O’s portfolio.

Great Hill Partners did not respond to Al Jazeera’s request for comment.

G/O is the latest in a string of companies laying off workers in the last few months alone.

Last month, Engadget, a brand owned by Yahoo, had a series of layoffs including of high-profile editors. It came amid a reported refocus on traffic growth. But how can you drive more traffic with high-quality reporting with fewer people to make the product?

Meanwhile, Apollo Global Management, which now owns Yahoo, is doing very well. The asset management firm’s stock is up nearly 250 percent over a roughly five-year period – 80 percent this past year alone. The firm acquired Yahoo in 2021 and also has a significant stake in several other large media companies, including Gannett, which owns hundreds of newspapers around the US, including USA Today, the fifth largest. In 2019, Apollo provided $1.8bn to finance the acquisition of the newspaper giant and merge it with GateHouse Media.

‘Layoffs were the core strategy’

Once Gannett’s acquisition of GateHouse was complete, it scrapped hundreds of jobs immediately. In 2022, the newspaper group slashed roughly 600 more jobs in two rounds of cuts in August and November.

Apollo also acquired both Northwest Broadcasting and Cox Media Group, which included 54 radio stations, and 33 TV stations.

“After funds became owners, layoffs were the core strategy to try to maximise revenue. [These are] firms that just had profit as the sole motivation,” Susca said. “Layoffs are the stark reality of hedge fund ownership and private equity investment.”

Historically, private equity firm involvement has led to layoffs – an average of 4.4 percent of job losses in two years as well as a 1.7 percent decrease in pay, according to a study from the University of Chicago.

That is what happened at Cox Media Group. Almost immediately after its acquisition, talent from local TV and radio stations across the country was laid off.

Apollo Management did not respond to Al Jazeera’s request for comment.

New York-based Alden Capital operates a similar job-cutting strategy and is one of the most infamous hedge funds in the sector for decimating a number of newspapers around the country.

In 2020, Vanity Fair referred to the firm as the “grim reaper of American newspapers”.

Vanity Fair’s stern critique is because of the massive slate of layoffs at the papers Alden Capital owns, including the Denver Post, even as one of the company’s executives said “advertising revenue has been significantly better”, according to reporting from Bloomberg in 2018.

Alden bought Tribune Publishing and gutted many of its newsrooms. At the time, Tribune was profitable, but Alden still moved forward to strip down its papers to make more profits.

Alden often pushed to beef up subscriptions even after shedding physical assets like office space and social assets like its people, which, Tim Franklin, senior associate dean at Northwestern University Medill School of Journalism, suggests is a losing strategy.

“It’s like charging for 16 ounces of Coca-Cola and putting it in a 12-ounce bottle. You’re giving people less and then expecting people to pay. The problem is that you end up in this doom loop. You’re getting less digital subscription revenue because you are providing less content, so then you make cuts and then you see even less revenue and you make more cuts. It’s this never-ending cycle of rinse and repeat,” Franklin said.

Alden Capital did not respond to Al Jazeera’s request for comment.

Doomed to failure

Shadow banks and big banks have made risky investments and hoped they would work out financially.

They sold the idea that someone could very well make payments on a subprime mortgage. Now, the idea is that a media company can create quality reporting on a shoestring budget and a fraction of its headcount. But those are unrealistic expectations and doomed for failure.

During the 2008 housing crisis, big banks essentially created an insurance plan for themselves: sell the debt and make money off the interest. Now private equity is employing a comparable strategy for media.

In the housing crisis, the banks bundled the mortgage loans in a package and sold them to the bond market to random investors. The banks had protections. If a lender defaults, they sell the debt on the secondary market for a profit. The strategy was to bet on the homeowners who were most likely not going to be able to afford the mortgage payments. But ultimately, that backfired, and the resultant housing crisis has been well documented.

“The only people there [who] were able to buy homes at the point could do so with cash or with Wall Street financing because that cash was still flowing,” said Aaron Glantz, author of Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream.

“Private equity is not depending on that credit system,” Glatz added.

A view of a sign for NBC News at Rockefeller Center in New York
NBC and MSNBC laid off employees [File: Justin Lane/EPA]

In either situation, the protections afforded investors were not passed down to homeowners in 2008 or writers, editors, on-air talent and others in the media industry now.

While some savings and lending banks failed and were the recipients of massive bailouts, shadow banks flourished. Generally speaking, these companies make money during times of economic vulnerability, leading to an even more challenging situation for average people.

In the wake of the 2008 financial crisis, funds were largely criticised for buying up distressed housing across New York City and forcing out longtime residents – a move that brought rent-stabilised properties to market rate, which ultimately allowed them to drive up prices on their buildings and raise the value of the buildings around them.

“They’re reliant on cash that is just sitting around ready to be spent or credit lines that they can get from banks like JPMorgan Chase or they can leverage other assets. They own so many other assets,” Glatz said.

One of those assets over the past decade is a growing number of media companies.

But even then, it poses the question: If all these media companies are struggling, why are their executives so wealthy?

Behind a number of these mass layoffs are uber-wealthy executives. That’s the case for Business Insider, The Washington Post and Vice, just to name a few.

In January, Business Insider, owned by the German media giant Axel Springer, laid off 8 percent of its workforce. Axel Springer, however, is doing well financially. Its CEO, Mathias Doepfner, has a net worth of $1.2bn.

Executives on both the editorial and business side at the short-lived outlet The Messenger raked in close to million-dollar salaries. Meanwhile, editorial staffers launched a crowdfunding campaign to make ends meet because the outlet did not give them any severance packages.

NBC and MSNBC laid off 75 people this year. Brian Roberts, the CEO of NBC’s parent company, Comcast, raked in more than $32m in 2022.

Despite the recent layoffs, the network hired former Republican National Committee Chairwoman Ronna McDaniel as a contributor. Hiring McDaniel was met with swift backlash from high-profile talent across the news organisation and the NBC News Guild, the union representing journalists across the network.

The union in particular pointed out that McDaniel – who was known for helping to enable former President Donald Trump’s baseless claims that the 2020 presidential election was rigged – was hired after the company laid off more than a dozen unionised journalists. Amid the backlash, NBC cut its ties with McDaniel.

NBC is just the latest major network to make job cuts. At CBS, despite its high viewership during American football’s Super Bowl, parent company Paramount laid off staffers the following day at CBS News. Meanwhile, CEO Bob Bakish made $32m in 2022.

In November, Conde Nast laid off 5 percent of its workforce. The Newhouse family, which leads Advance Publications, the parent company of the magazine giant, has a net worth of $24.1bn, according to Forbes.

A VICE Media Group location
Vice Media, which was once valued at close to $6bn, has since filed for bankruptcy and ended publishing on its website [File: Eric Thayer/Getty Images/AFP]

In recent weeks, Vice laid off hundreds of employees and ended publishing on its website. It has been plagued with a nearly endless series of layoffs in the past few years. Prior to filing for Chapter 11 bankruptcy last year, the media company paid its executives roughly $11m – even though its executives were notoriously known for mismanagement.

Yet they were bailed out. Amid the Chapter 11 filing, Fortress Investment Group acquired Vice – a company that was once valued at $5.7bn – for $225m. Executives left with hefty paycheques while staffers were left jobless with little notice.

Fortress did not respond to Al Jazeera’s request for comment.

The Washington Post eliminated 240 jobs, yet it is owned by Jeff Bezos, the founder of Amazon, who is worth more than $200bn, according to the Bloomberg Billionaires Index, making him the second-richest person in the world.

In 2019, Senator Sherrod Brown sent a stern letter to Alden Capital, pressing the fund not to buy Gannett. Brown was unsuccessful.

In 2021, Brown, alongside Senators Tammy Baldwin and Elizabeth Warren, introduced the Stop Wall Street Looting Act, which would have reformed the private equity industry.

The bill never made it past committee, so it never had a vote in the full Senate.

Experts believe that Washington has not done nearly enough to curb the power of private equity.

“You have a government system, a regulatory, legislative system that has basically failed at every turn to stop the growth of these hedge funds,” Susca said. “And private equity firms in the journalism market, to me, is an institutional failure.”

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Trump Media, Reddit surge despite questionable profit prospects, taking on the ‘meme stock’ mantle

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NEW YORK (AP) — Reddit and Trump Media are the first notable social media companies to begin trading publicly in the last five years. They’re also, thanks to the rabid reception among investors coupled with the companies’ fuzzy profit outlooks, the latest meme stocks.

Meme stocks are typically shares in companies whose underlying business fails to justify a surge in their price. The action is often driven by small investors who for some reason pile into a stock, be it belief that a struggling company can turn itself around, a disdain for so-called short sellers — or fidelity to a former president. Or simply opportunism.

Reddit’s initial public offering last week was the most anticipated debut so far this year, and it didn’t disappoint, rising 48% on the first day. The stock gained an additional 30% Monday.

Then Trump Media stole Reddit’s thunder by jumping as much as 59% on its first day of trading Tuesday, before cooling off and closing with a gain of 16%. On Wednesday, the stock gained an additional 14% to close at $66.22. Former President Donald Trump holds a majority stake in Trump Media that could bring him billions.

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Analysts and academics are comparing the surge in Reddit and Trump Media to the meme stock craze in 2021 that boosted shares of companies such as video game retailer GameStop and movie theater operator AMC Entertainment. Although there are differences between the two groups, the companies did have two prominent similarities: It was hard to look at the financials and predict a path to long-term profitability. But small investors bought in nonetheless.

Trump Media lost $49 million in the first nine months of last year, when it took in just $3.4 million in revenue and had to pay $37.7 million in interest expenses. In a recent regulatory filing, the company said it will lose money “for the foreseeable future.”

Research firm Similarweb estimates that Truth Social had roughly 5 million monthly visits in February of this year. By comparison, Facebook had 15.2 billion visits, while Reddit had 2 billion.

Reddit, like its social media peers, relies on user growth and advertising revenue, but it has yet to turn a profit in its nearly 20-year history that has also been beset by management turmoil and user backlashes. About 76 million users checked into one of Reddit’s roughly 100,000 communities in December, according to a regulatory disclosure.

While Reddit and Trump Media can be considered newer technology companies, GameStop and AMC were considered to be somewhat antiquated when small investors latched onto them in late 2020 and early 2021. GameStop struggled while selling video games and consoles in stores without a digital alternative, and AMC lost billions of dollars as movie fans embraced streaming and the pandemic kept them out of theaters.

Granted, GameStop had the backing of Ryan Cohen, founder of the e-commerce pet food company Chewy, who investors likely thought could modernize GameStop’s business. But a number of investors were individuals who belonged to the Reddit community Wall Street Bets and bought shares in order to “stick it to” to big institutions that had made bets the stock would drop. As the stock took off, even more investors seized the opportunity to buy.

Many of those investing in Trump Media are also small-time investors either trying to support Trump or aiming to cash in on the mania. They helped the stock of Digital World Acquisition more than double this year ahead of its merger with Trump Media, which took its place on the Nasdaq stock market. As the stock jumped Tuesday, one user urged conservatives to “get behind the DJT stock and send it over $100 per share” to “drive the liberals insane!”

Data from Vanda Research show that retail investors bought $6.5 million of Trump Media shares on its first trading day and $7.9 million of Reddit shares for its debut.

The frenzy surrounding GameStop and AMC eventually died down. GameStop’s market value peaked above $20 billion in January 2021; it’s now just above $4 billion after Cohen’s turnaround has for the most part failed to materialize. AMC’s market value has dropped from a high of around $29 billion to about $1.5 billion. While both carry on — GameStop even reported a small profit for the fiscal year ended in January — analysts question their longevity.

Following the release of GameStop’s earnings report Tuesday, Michael Pachter, an analyst at Wedbush Securities, wrote in a note to investors that steeper revenue declines for the company could lead to large losses and possibly bankruptcy.

“If we’re right, GameStop has a likely runway of no more than five years,” Pachter said.

Even so, Pachter is even more skeptical of the fervor over Trump Media in the market. He notes that GameStop had revenue of more than $5 billion back in 2020 while Trump Media’s revenue is under $5 million.

“GameStop was the meme stock of a lifetime, but Trump Media has put it to shame,” Pachter said in an email.

The Associated Press

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