Why on earth is Wall Street valuing Donald Trump’s little social network at $7 billion despite having few users, scant revenue and tremendous losses? This week on “How We Got Here,” Max and Erin take stock of how wonky and meme-ified investment markets have become, what this means Trump’s legal bills, and why “DJT” shares would never be this high if not for Netscape and GameStop.

 

 

SOURCES

Trump Media’s Business Doesn’t Matter – Bloomberg

Pump and Dumps Are Legal Now – Bloomberg

Jonathan Lebed’s Extracurricular Activities – The New York Times

Trump Media stock plunges as 2023 Truth Social loss put at $58 million

Opinion | ‘Dumb Money’ and the Meme Stock Phenomenon – The New York Times

Meme Stocks Are Back. Here’s Why Wild Trading May Be Here to Stay. – The New York Times

Trump Stock Takes Washington by Storm – WSJ

Who Is Fueling the Surge in Shares of the Trump SPAC? – WSJ

Trump’s Dazzling Truth Social SPAC – WSJ

 

TRANSCRIPT

 

Max Fisher: Erin, can you do some back of the napkin math for me? 

 

Erin Ryan: Napkin math is the only thing keeping the napkin industry alive, so I am glad to do napkin math. 

 

Max Fisher: [laugh] Doing your part. Okay. How is a company with only four million dollars in revenue against $62 million in expenses? 

 

Erin Ryan: Okay, plus four million, -62 million equals 58 million in losses. Not great. 

 

Max Fisher: Okay, but on top of that, there’s also no real business plan. There’s almost no assets. There are almost no paying customers. And their financial disclosure include what’s called a going concern notice. 

 

Erin Ryan: Which is accountant speak for saying that the company cannot sustainably continue as it has been. 

 

Max Fisher: Okay. So run all those numbers. 

 

Erin Ryan: Okay. 

 

Max Fisher: You used to work in finance. How much do you think that company would be worth if it went public this week? 

 

Erin Ryan: I mean, it sounds like you’re describing a failing media company. 

 

Max Fisher: That’s a really good guess. That’s exactly what it is. 

 

Erin Ryan: Well, when BuzzFeed went public a couple years back, it claimed a valuation of $1.5 billion. The try guys tried it. 

 

Max Fisher: Yeah. 

 

Erin Ryan: But traders didn’t agree and pushed the share price to a fraction of that. And BuzzFeed’s business had better numbers than whatever garbage fire company you’re talking about. 

 

Max Fisher: Okay, okay. So what’s your guess? 

 

Erin Ryan: Okay, how much do I think it’s worth? Maybe 50 million? A Bucket of magic beans? A limited edition Princess Diana Beanie Baby with the tags attached and in mint condition maybe?

 

Max Fisher: I mean that’s worth something. 

 

Erin Ryan: I mean I–

 

Max Fisher: That’s worth real money. 

 

Erin Ryan: Exactly. But I would not invest in this company. 

 

Max Fisher: Okay, so this is a real company. It did go public last week and it is now worth, wait for it, $6.7 billion. 

 

Erin Ryan: That is stupid. 

 

Max Fisher: It is stupid. 

 

Erin Ryan: But you’re talking about the Trump media and technology group, right? Otherwise known as Truth Social. 

 

Max Fisher: Yup. Yup.

 

Erin Ryan: The barely used so-called social media platform that’s just kind of Trump’s live journal. 

 

Max Fisher: Okay. Almost no revenue, big losses, no business plan, and yet $6.7 billion. What is going on? [music break]

 

Erin Ryan: I’m Erin Ryan. 

 

Max Fisher: And I’m Max Fisher.

 

Erin Ryan: And this is How We Got Here, a new series where we explore a big question behind the week’s headlines and tell a story that answers that question. 

 

Max Fisher: Our question this week, why on earth is Trump’s little social network, despite having virtually no users or revenue and big losses being valued by Wall Street at nearly seven billion? 

 

Erin Ryan: It’s a question that’s really more about Wall Street and how incredibly weird our investment markets have become than it is about Trump’s little dog shit website. 

 

Max Fisher: [laugh] It matters because Trump, at least on paper, now has shares of this company worth a couple of billion, which, if he can ever convert those shares into cash could cover, you know, a lot of legal bills. 

 

Erin Ryan: Yeah. If’s doing a lot of lifting in that sentence. 

 

Max Fisher: It is. 

 

Erin Ryan: You hear market analysts refer to Trump media as a meme stock, which is this new phenomenon for the last couple of years. And it is, but that’s just part of the story. 

 

Max Fisher: So the story we want to tell you this week is about a couple of weird, famous stock price run ups that came before this one and help to explain it. 

 

Erin Ryan: All together, they show why this unconscionable Trump media valuation represents something very new and maybe very destabilizing in the way our financial markets work. 

 

Max Fisher: Because if you can spin up a multibillion dollar valuation out of nothing, and that’s what this company is, then all of those investors who bought that stock, a lot of whom are just regular people, are going to lose it all when that price inevitably drops. 

 

Erin Ryan: But when you put Trump media in context with those other stories, you’ll see that in a lot of ways, Wall Street has always been a hype factory. 

 

Max Fisher: A lot of Silicon Valley is arguably built on overinflated stock valuations that kind of look pretty similar to the Trump media thing. 

 

Erin Ryan: We should explain how stocks, at the most basic level, are supposed to work, because it shows how far we’ve gotten from that. 

 

Max Fisher: Stocks first became a thing in 17th century Holland as a way to buy a tiny piece of a company, and in return you got a share of its profits, which are called dividends. 

 

Erin Ryan: You also sometimes get a say in how the company is run. 

 

Max Fisher: You do. 

 

Erin Ryan: A tiny little say. It’s almost hard to believe that this is all it comes down to. Here’s an informational video from the ’50s trying to get regular people interested in buying stocks. 

 

[clip of unnamed information video on stocks from the 1950s] Why not put your money to work? Put my money to work. That’s right, Mr. Feinstein. You can own a share of American business. There are over 1200 companies listed on the New York Stock Exchange. Companies which employ more than 11 million people produce half of all the goods made in America and pay about half of the nation’s dividends. 

 

Max Fisher: But this, of course, is mostly not how we think about stocks today as a way of getting long term dividends without having to start your own company. Instead, we think of them as more speculative investments, like pieces of a company that we can later resell for more than we paid, as long as the company is still healthy. 

 

Erin Ryan: And this is the thing about speculative stock trading, it’s as much about the mass psychology of the market as anything else. It’s about vibes Max.

 

Max Fisher: [laugh] I’m not just betting on the financial prospects of your business when I buy stock in it, I’m betting on what other investors will think it’s worth and how they will behave if and when let’s say demand goes up. 

 

Erin Ryan: Have you ever driven by a restaurant that you know is bad and there is a huge line out in front of it?

 

Max Fisher: Buying stock in that restaurant. 

 

Erin Ryan: And you know that people are just standing in line because there’s a line there. They think it must be good. 

 

Max Fisher: Mm hm. 

 

Erin Ryan: That’s kind of what the stock market is. 

 

Max Fisher: [laugh] The stock market. 

 

Erin Ryan: You could also call it gambling. Gambling for guys who went to Wharton. 

 

Max Fisher: Gambling if the dice were not inanimate little bits of plastic, but rather people, fellow investors driven by a combination of judgment, emotion and groupthink. 

 

Erin Ryan: And prone to manipulation. 

 

Max Fisher: Hey, you call it manipulation, I call it projected future earnings. 

 

Erin Ryan: I call it astrology for dudes. Which brings us to wild stock story number one for this episode, one of the most celebrated tech stock IPOs of the last 30 years. 

 

Max Fisher: A company that reminds me a lot of Trump media this week. 

 

Erin Ryan: That’s right. It’s everyone’s favorite long defunct 1990s web browser, Netscape. Here’s a documentary on the company’s rise called Project Code Rush. 

 

[clip from Project Code Rush] At 11 a.m. this morning, Netscape’s stock went public and Wall Street went bonkers. Initially offered at a price of $28 a share, Netscape shot up to 72 within minutes. The stock is bid up at extraordinary levels in the first couple of really days and weeks of its introduction. It is the biggest initial public offering in basically Wall Street history. 

 

Max Fisher: Here’s what’s weird about this. When Netscape went public in 1995, yes, it had one of the first web browsers, but it also had no profits. Like most of its customers used the browser for free. Yet investors went into a frenzy so that Netscape ended its first day of trading worth 2.3 billion, again without profits. 

 

Erin Ryan: In 1995 money. 2.–

 

Max Fisher: It’s yeah 1995 dollars.

 

Erin Ryan: Have you ever looked at a screengrab of what the search engine looked like at the time? 

 

Max Fisher: It’s cool. Yeah, I remember it. 

 

Erin Ryan: It looks like a form the government would have you fill out today. It is so bare bones. What was going on is that investors knew that there was a mania for tech stocks. 

 

Max Fisher: Earlier tech companies had gone public with also vague business plans, but a hot new product. Those companies eventually became profitable, which meant their stock prices shot up. And so now with Netscape, there’s a new hot tech stock. And everybody wants it because they think even though they don’t have a lot of reason to believe this, that it might shoot up later, too. 

 

Erin Ryan: This is where speculative markets become irrational in a way that’s going to help explain the Trump media thing. It doesn’t really matter whether you think Netscape will become a successful business. What matters is that whatever you pay for shares today, somebody else gripped by tech stock fever will pay more tomorrow. 

 

Max Fisher: Beanie babies like Beanie Babies. 

 

Erin Ryan: Seriously. 

 

Max Fisher: And we should say investors knew that Netscape didn’t really have a business model. Like here’s another clip from after the company went public. Also from that same documentary Project Code Rush. 

 

[clip from Project Code Rush] David Retterman, an analyst for a San Francisco investment bank, closely monitors Netscape’s radical plan for investors eager to participate in the internet stock boom. They still have to show me um that um behind the vision and the [?], there’s a real, sustainable business model that can deliver earnings. 

 

Erin Ryan: Now shut up, nerd. [laughter] Netscape’s story after this is a little messy. AOL acquired it so Netscape investors had their stock converted to AOL stock. Then AOL blew up and that stock lost most of its value because when a company goes belly up, shareholders are SOL. 

 

Max Fisher: The point of all this is that people who took at face value that if Netscape’s stock is high, the company must be valuable. They actually mostly lost their money. 

 

Erin Ryan: The people who won out are the ones who, whether they called it mania or not, treated it as one buying as the price was rising and then selling before it dropped. Number go up!

 

Max Fisher: Number go up. So yes, some investors got rich off of Netscape, but they didn’t get rich from Netscape, which never made any money. They got rich off of other investors. 

 

Erin Ryan: And this is what Trump Media eventually taps into, albeit in a different sort of way. 

 

Max Fisher: Of course, no one in Silicon Valley acknowledges that this is often their business model, but there are these whole ecosystems of angel investors and venture capitalist firms built around this idea that you start a company and your ultimate goal is not to make a profit. It’s to hype that company to investors who will bid up the stock price. 

 

Erin Ryan: And then you, the company’s founder or its early investor will get rich by taking the company public in an IPO or selling it off to a big buyer like Google or Microsoft. Not by painstakingly turning a profit by making something tangible that people need and want to buy. 

 

Max Fisher: We’re going to come back to Trump media, but boy is that point relevant to Trump Media, whose business model sure seems to be about playing investors off each other rather than turning a profit. 

 

Erin Ryan: To put it crudely, but highfalutinly hyper capitalist auto fellatio. 

 

Max Fisher: [laugh] That’s pretty good actually.

 

Erin Ryan: And what’s important here is that it’s not unusual. Trump media’s grimy, scammy strategy isn’t novel, thanks to the economics of stock speculation, getting investors to drive up your stock price above and beyond your company’s actual value is just part of doing business now. Pretty important part, see also Tesla. 

 

Max Fisher: See Tesla, which creates some perverse incentives in a way that will also be relevant to the Trump media story. 

 

Erin Ryan: So much of our economy is built on the idea that every asset, whether it’s a company or a stock or your home, has a specific value. But in publicly traded markets, that value is whatever everyone believes it is. I used to see this all the time when I worked in finance. 

 

Max Fisher: Oh, that explains the private helicopter you took to the office today. 

 

Erin Ryan: I would never ride a helicopter. No, no, no, no Range Rover only. Um. When I was at Merrill Lynch in 2007, 2008, I was dealing with clients who were seeing their portfolios crater because they owned things like Lehman and Countrywide stock, both places that enough people had decided collectively in their imaginations were worth a lot of money. Countrywide, you might recall. 

 

Max Fisher: I do. 

 

Erin Ryan: Was the company that was underwriting a lot of the subprime mortgages that formed the nucleus of the economic sinkhole that threatened to swallow the entire real estate sector. 

 

Max Fisher: Right up until the moment of the financial crisis, those investments were worth a lot of money. 

 

Erin Ryan: And once everyone agrees that a company is worth a certain imaginary amount of money, they start making real transactions against that amount. To underwriting debt, say, or taking out loans if you’re the business owner or founder. But if reality undercuts the imaginary value of a company like Countrywide, the real money thrown after the imaginary valuation starts to become insurmountable. You owe a lot of people a lot of money. Your company isn’t actually making you money to pay those people back. 

 

Max Fisher: But how does that become a bigger problem for it? 

 

Erin Ryan: So let’s say my company’s stock price has been bid up enormously. I start acting like my company’s actually worth what the share price says it’s worth. So I take out loans, I make plans to expand. But then it comes out that a new technology I’ve been promising for years actually failed its beta test. 

 

Max Fisher: Oh no.

 

Erin Ryan: And investors freak out and a selloff begins. Now I owe people real money on real loans that I took out when people thought my company was worth a fake amount of money. [music break]

 

[AD BREAK] 

 

Max Fisher: Trump media seems different from all this. Like it’s not a Netscape where investors are chasing a bubble or fooling themselves into believing there’s a real business here. It’s not a mortgage broker like Countrywide, basing everything on the market, treating mortgages as more valuable than they really are. 

 

Erin Ryan: There’s something more fundamental that ties all these together though, that a company’s value is made up. It’s made up by the collective delusions of the investment market. 

 

Max Fisher: Oh I see. 

 

Erin Ryan: People can be pretty irrational and, dare I say, emotional. 

 

Max Fisher: Yeah. 

 

Erin Ryan: And they’re often irrational in ways that reflect both the structural economic incentives and the cultural idiosyncrasies of their time. 

 

Max Fisher: Like GameStop, our next weird stock story, and the one that is getting compared the most to Trump media. 

 

Erin Ryan: It’s time to go to the King of Cacophony himself. It’s time for Jim Cramer. 

 

Max Fisher: Oh. The Mad Money guy. 

 

[clip of Jim Cramer] I’m seeing short squeezes all over the place. In many cases, they are actually being orchestrated by motivated young stock buyers who are explicitly trying to crush the shorts using websites that, frankly, are a lot of fun, but I think are encouraging people to do something that I hope they continue to make money on. They may not. And that brings me to GameStop, the troubled video game retailer. For years, this stock has been absolutely hated because the whole industry is moving online. So shorting game stock had been like shooting fish in a barrel. [sound of gun shots]

 

Erin Ryan: I hope whoever’s job it is to clean the spittle off the boom mic is union and well compensated. Okay, that’s enough. Jim.

 

Max Fisher: Can you translate that into English for us please?

 

Erin Ryan: Okay. Go back to 2020. Sorry to ask you to do this. 

 

Max Fisher: Ugh. 

 

Erin Ryan: Nobody wants to go back there. It’s the pandemic. Many of us are stuck inside with very little to do. And because people aren’t going out or traveling, their spending money is piling up with nowhere to spend it. A lot of people start putting that money into really unsound speculative investments like crypto. 

 

Max Fisher: Oh God. NFTs. Remember people paying thousands of dollars for a Jpeg cartoon of an ape wearing sunglasses?

 

Erin Ryan: I still don’t know what NFTs are. I’ve, like, had them explained to me and I’m just like, no, my brain does not need to record this. 

 

Max Fisher: Well, good news for you. They’ve come and gone so you never have to learn. 

 

Erin Ryan: It’s really just gambling on purely speculative assets with no intrinsic value beyond the hope that someone else even more bored and reckless than you, will pay more for it. 

 

Max Fisher: And it’s around then that an app called Robinhood gets really big. 

 

Erin Ryan: We should say that Robinhood has previously sponsored some Crooked Media podcasts, but does not currently. 

 

Max Fisher: So Robinhood allows you to buy and sell stocks without going through a broker or paying a commission. 

 

Erin Ryan: So for people stuck at home looking for an exciting new smartphone game that will give them something to do with the extra pandemic cash, Robinhood stock speculation is it. 

 

Max Fisher: So all these online communities form around sharing stock tips. One of the biggest is a forum on Reddit called Wall Street Bets, and it’s actually not so totally unlike an investment broker dealer. But instead of pros, it’s a bunch of day traders loosely coordinating what to buy and sell each day. 

 

In 2021, one of them posts to Wall Street bets, arguing that a company called GameStop is worth more than its listed stock price. 

 

Max Fisher: GameStop is a brick and mortar video game store, the kind of business that was shrinking before the pandemic and terminal after it. So not only had investors long been selling off any GameStop shares, but they had been shorting it. 

 

Erin Ryan: So we should explain shorts and not the kind that you get frowned at for wearing to the halls of Congress. We should explain stock shorts because it becomes important for the Trump media thing. A short is when you bet that a stock’s price will drop, but the mechanics of it are kind of funny. 

 

Max Fisher: When you short a stock, you are paying someone who currently owns that stock to borrow it from them for a little bit. 

 

Erin Ryan: Let’s say you short a stock at $10. That means you borrow it from somebody who already owns it when the price is at $10, then you sell that share on the open market for $10. In a few weeks if you’re right, the price will go down to let’s say, $7. You buy it back at that price, then return it to the original owner. You’ve just made $3 minus whatever fees you paid to the other investor you borrowed it from. So investors are so bearish on GameStop, that means that they believe that GameStop is going to decrease– 

 

Max Fisher: Oh I see. 

 

Erin Ryan: –in stock price, that technically, 140% of all GameStop shares are being borrowed for shorts. 

 

Max Fisher: That’s because some of the shares are being shorted multiple times. 

 

Erin Ryan: The Wall Street bets people see an opportunity. If the share price goes up and they think it will, then holding shorts on the stock will suddenly get pretty expensive. 

 

Max Fisher: Remember that to close out a short, you actually have to buy back a share of that stock. So if a lot of short sellers have to do this all at once, then it will drive up the price even further. 

 

Erin Ryan: This is called a short squeeze, and it’s exactly what Wall Street Bets wants to trigger. 

 

Max Fisher: Their plan is to buy up shares, wait for the price to rise when the company’s performance improves, push it further with more concerted buying. Trigger a short squeeze that will pop the price up artificially and sell for a profit, all while screwing the funds and institutions that hold all of these short positions in GameStop. 

 

Erin Ryan: This, again, is so far within the range of normal if risky stock speculation. 

 

Max Fisher: Yeah, it’s not really a meme stock yet at this point. And the plan, we should say, works just about as they’d hoped. But then things spiral out of control. Wall Street Bets is producing all these memes celebrating their win that make it look really fun. 

 

Erin Ryan: Word gets around the social web that a bunch of Reddit nerds figured out how to make money from Wall Street fat cats by manipulating the stock market. 

 

Max Fisher: Although now the stock price is well above its fair market value thanks to the short squeeze, so inevitably it’s going to come back down. 

 

Erin Ryan: But millions of web users think it’s just a scheme for free money. They start buying up GameStop shares in huge numbers. The price ultimately rose by 3,000%. 

 

Max Fisher: I know it’s wild.

 

Erin Ryan: So many people traded on Robinhood that the app had to pause trading to meet its collateral requirements. 

 

Max Fisher: At this point, it’s no longer a remotely wise investment. It’s something that we now call a meme stock, which refers to a buying frenzy driven mostly by social media. 

 

Erin Ryan: Here’s a CNBC interview from the midst of that frenzy with an investor named Stephen Weiss. 

 

[clip of CNBC interview with Stephen Weiss] Well, I’m thinking that this GameStop situation is the craziest I think I’ve ever seen. Uh. Usually you have a short squeeze and it goes up, but this one keeps going. So this really speaks to the changing demographics of investors in the market. And what I mean by that is the people that really true investors never heard of Reddit a few years ago. Sure it’s been around. We know it. But for that to drive a short squeeze in a company that’s so fundamentally flawed, as you pointed 100% last week, 50% today, there’s no there there. So that’s why you have to be careful. But I do not think that this is a manifestation of a bubble market. I think it’s a manifestation of bubble stocks. But we’ll see this play out over and over again with others. 

 

Erin Ryan: You can practically hear that guy’s bow tie spinning around. 

 

Max Fisher: [laugh] He’s upset. 

 

Erin Ryan: He’s so upset, his monocle keeps popping out. That idea, the greater fool theory is an important one. It means that when you find yourself foolishly buying an overvalued asset like Bitcoin or a share of GameStop or a house in Silver Lake, you’re only hope is to sell it to someone else for a bit more. 

 

Max Fisher: A greater fool. 

 

Erin Ryan: But eventually people will realize that the asset is overvalued and the last person to buy it will end up losing all their money. 

 

Max Fisher: Which is what happened with GameStop. This flood of social media users who jumped in were mostly just bidding against each other, not against Wall Street and people who bought it, you know, $300 a share, $400 a share. They never got that money back. 

 

Erin Ryan: Like with Netscape, this became a lot of investors making money off other investors. And by the end, those winnings were coming out of the pockets of regular people who hadn’t understood what they were getting into or who’d gotten into late. 

 

Max Fisher: So here’s a clip from a guy, just a regular guy named Jeffrey Yamada, talking on his YouTube channel about how he’d lost thousands chasing what he’d been told by Reddit was an unloseable bet on GameStop. 

 

[clip of Jeffrey Yamada] I woke up hours after um, the stock stopped, stopped trading, and ended the day at $53. So at this point I was down $18,000. That night I check WallStreetBets and it was chaos. There was no longer a unified front. That it was still very entertaining though. 

 

Max Fisher: So we are now another big step removed from the core purpose of stocks. To buy a share in a company’s profits. We’re not even at speculative trading anymore, betting on how other investors will buy you a company. These are meme stocks and they’re just gambling. They’re crypto. They’re mobile games where the object is to put your money in while the chart is going up, and take it out before the chart goes down. 

 

Erin Ryan: Here’s the thing about Wall Street, Max. It will find a way to turn a profit off of anything. And now the meme stock phenomenon has shown that under the right conditions, huge numbers of people will plow their money into unwise stock trades. 

 

Max Fisher: Enough people have already lost their nest eggs on meme stocks that the SEC actually produced a commercial warning against them. 

 

[clip of SEC commercial] [indistict crowd sound] Welcome back, Brad. It’s your investment. I’ll take meme stocks. Invest. [sound of crowd moaning] Ouch. Your investment, Julie? I’m going to do some research first. Well played. Julie. Okay. We can do research?

 

Max Fisher: So the phrase for when a lot of people are investing irrationally like this is dumb money. And where there’s dumb money spraying around, someone will look for a way to capture it. 

 

Erin Ryan: Enter Donald J. Trump. 

 

Max Fisher: Womp womp. 

 

[clip of unspecified person] Mr. Trump, increased his net worth by nearly $5 billion after merging his social media platform with a special purpose acquisition company, or SPAC, called Digital World, and began trading under the ticker DJT. 

 

[clip of Donald Trump] It’s a great sign of where the people in this country stand. It’s almost like a poll, but you see how hot it is. It’s one of the hottest stocks that anybody has ever seen. 

 

[clip of unspecified person] By day’s end, the Trump media and Technology group, which had produced only $5 million in sales since its 2021 inception, was worth some $8.5 billion. That’s surely better than Mr. Trump’s margin in Bible sales. 

 

All Americans need a Bible in their home, and I have many. It’s my favorite book. 

 

Erin Ryan: Oh my God, Max, where did you find this low rent MAGA propaganda? 

 

Max Fisher: Yeah, that would be the Wall Street Journal opinion page. 

 

Erin Ryan: Okay, like I said, low rent [?] [laughter] propaganda. Yikes. Anyway, Trump Media, which owns Truth Social, went public last week and despite having virtually no earnings and no customers, investors snapped up so many shares it went to $8 billion. 

 

Max Fisher: Yeesh. This week a few days after that IPO, Trump Media released their 2023 financial disclosures. And those were the really dismal numbers we listed at the top of the show. Right? Remember all those losses. 

 

Erin Ryan: Uh huh. 

 

Max Fisher: And the stock value dropped when that news came out to a valuation of $6.7 billion, which is a big drop, but it’s still really high. 

 

Erin Ryan: It gets compared a lot to GameStop. The conventional wisdom is that it’s a meme stock. It’s dumb money. It’s people on social media swarming the stock because they saw memes telling them it would be fun to drive up the price. 

 

Max Fisher: And there’s truth to that, for sure, but I feel like it has just as much in common with those tech bubble stocks we talked about like Netscape. 

 

Erin Ryan: Yeah, investors snapped up Netscape because they thought someone else would ultimately pay more for it because there was a sustained frenzy for tech stocks. 

 

Max Fisher: And now there’s a different kind of frenzy at play here, but it’s still a frenzy. Investors know that there are a lot of Americans who are really eager to own something that will signal their membership in the Trump supporting MAGA right? 

 

Erin Ryan: A share in Trump media is about $50, which is more than a Maga hat, but less than those ugly ass Trump sneakers. 

 

Max Fisher: I think one difference with GameStop, though, is that there’s no like, plan among grassroots investors to artificially juice the stock to a certain price so that they can then sell it to make money. 

 

Erin Ryan: To the extent that there is a social media push, it’s among people who want to hold the stock because they like owning it as an expression of their political identity, not people looking to pump and dump. 

 

Max Fisher: And we should say there have been other stocks that basically exist to be purchased by Fox News viewers looking to own the libs. Like Black Rifle, the right wing coffee company. Rumble, the right wing YouTube clone. Public Square, the right wing Amazon clone. 

 

Erin Ryan: All of them like Trump Media, opened high before the stock dropped really hard. One wave of meme buyers can’t sustain an inflated valuation it turns out. 

 

There’s another way this reminds me more of Silicon Valley blue chips like Netscape or Uber than it does GameStop. 

 

Erin Ryan: The corporate boards of all white men who believe that taxation is slavery?

 

Max Fisher: Close. So remember that Netscape, like, had no business plan. And Uber, of course, lost billions a year for years. Tech investors love these companies anyway because they believed, maybe irrationally, that they at least could one day exploit their market position to become super profitable. 

 

Erin Ryan: Ah. Disrupting. Now some investors think the same thing about Trump media, not because its technology is any good, but because Trump might become president again. And then who knows what sort of wildly corrupt levers he’ll be able to pull to make his company profitable. 

 

Max Fisher: Maybe he’ll order the State Department to conduct all diplomacy via Truth Social posts. 

 

Erin Ryan: It’s a cynical and evil investing scheme, and it’s probably a long shot, but you could say the same about early investors in Uber hoping the company would put taxi drivers out of work. 

 

Max Fisher: And even if you think that not even all of the corruption at Trump’s disposal could turn this piece of crap company profitable, then maybe you still believe that other investors will think that. And so you buy this stock now with an expectation of selling to those people, the greater fools, in the fall. 

 

Erin Ryan: He doesn’t need to do a hit on Jim Cramer’s spittle money to get attention. He could just, oh, I don’t know, make the stock ticker symbol his initials like he did back in 1995 when his Atlantic City casino went public. 

 

Max Fisher: Oh, I remember this. 

 

Erin Ryan: Only to go bust. You remember this? You were a child Max.

 

Max Fisher: I’m a big, big follower of Atlantic City real estate. 

 

Erin Ryan: Oh okay, okay. But that’s another Wall Street fairy tale for another time. 

 

Max Fisher: So I guess I’m left with two thoughts on all of this. On the one hand, this Trump media thing does feel like the arrival of something new and maybe kind of seismic in how our markets work. 

 

Erin Ryan: Right wing meme stocks you mean, that raise hyper inflated valuations by getting the Fox and friends set to push their savings into the stock on Robinhood, hoping that small investors in Wall Street will get into an arms race to see who can plow the most dumb money into the pockets of Trump and other right wing grifters. 

 

Max Fisher: Right. It’s not great. And if this becomes a successful model, it could really multiply the ability of these right wing Fox News figures to hoodwink people out of their money. But at the same time, and this is maybe what I’m most left with, is that this is all not as new as it looks. It’s actually pretty similar to a lot of what we’ve seen for years, not just with meme stocks, but all sorts of investor behavior that we accept as normal, especially the huge investor driven tech boom of the zero interest era from 2008 to 2022. But that’s a form of stock manipulation that we just accept. 

 

Erin Ryan: Yeah, and I can’t help but think that the proliferation of meme stocks exposes the overall fakeness of the market. 

 

Max Fisher: Oh yeah yeah. 

 

Erin Ryan: Like the the emperor, the emperor not only doesn’t have any clothes on, but he’s running in like a streaker with a message written on his chest. You know? 

 

Max Fisher: He’s bragging on CNBC about it.

 

Erin Ryan: Exactly. He’s never wearing any clothes. He’s like, I don’t wear clothes. And when a large number of people see the stock market for what it really is, which is vibes on vibes, they’ll be less comfortable investing their real money into it. I feel like the more that Wall Street looks like a casino and less like a bank, the more Americans could turn to other asset classes that seem to offer a little bit more seriousness and stability, especially as tens of millions of people approach retirement age and don’t really have room to be risky anymore. 

 

Max Fisher: I mean, I hope that’s what they do. But at the same time, lots of forms of gambling are up. And if people see that this is a casino, maybe that makes some people more drawn to it. 

 

Erin Ryan: That’s true. We did do a whole episode on sports gambling. 

 

Max Fisher: Right? Is this just another form of sports gambling? 

 

Erin Ryan: It’s another form of sports gambling. But for me personally, I’m going to stick with [?] for a little while. Let’s close out with a clip from a and I swear this is real, 2009 musical production about another bit of financial trickery gone wrong, the Enron collapse. 

 

[clip from 2009 musical about Enron] I believe in God. I believe in democracy. And I believe in the company. There’s your mirror. Every dip. Every crash. Every bubble that’s burst. That’s you. Your beautiful stupidity. [music break]

 

Max Fisher: How We Got Here is written and hosted by me, Max Fisher, and by Erin Ryan. 

 

Erin Ryan: It’s produced by Austin Fisher. Emma Illick-Frank is our associate producer. 

 

Max Fisher: Evan Sutton mixes and edits the show. 

 

Erin Ryan: Jordan Cantor sound engineers the show. Audio support from Kyle Seglin, Charlotte Landes and Vasilis Fotopoulos. 

 

Max Fisher: Production support from Adriene Hill, Leo Duran, Erica Morrison, Raven Yamamoto, and Natalie Bettendorf. 

 

Erin Ryan: And a special thank you to What a Day’s talented hosts Tre’vell Anderson, Priyanka Aribindi, Josie Duffy Rice, and Juanita Tolliver for welcoming us to the family. [music break]

 

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