Why BuzzFeed Is Closing Its News Division

“When Apple takes an interest in a company, it’s the kiss of death.”

— Joe Kiani, the founder of Masimo, a blood-oxygen measurement start-up. Kiani is one of several technology executives who told The Wall Street Journal that Apple reached out to discuss a potential partnership, only to later roll out competing technologies.

A social-media-powered bank run

Silicon Valley Bank’s collapse last month was called the first “Twitter-led bank run,” with many speculating that social media posts about the lender’s woes helped spark the rush of withdrawals that caused it to fail. Now, a group of finance professors has put the theory to the test — and found evidence that supports it.

“Social Media as a Bank Run Catalyst,” a new working paper, analyzes extensive Twitter and bank-stock data before and during the run on SVB, showing that intense chatter on the social media platform preceded a sharp share price decline and increased the risk of a bank run.

“Discussion amplifies risk,” J. Anthony Cookson, an associate professor of finance at the University of Colorado Boulder and the report’s lead author, told DealBook. “SVB was a high Twitter conversation stock,” he added, as the bank had many depositors who were hyper-connected tech company founders, so they tended to be online and “very chatty.”

Coordination is a well-known element of bank runs. But the new paper suggests that social media creates more risk than the slow spread of information among personal connections. “The implication that social media matters for banking stability is potentially troubling because social platforms can spread inaccurate information, which could serve as a sunspot that leads to bank runs,” the researchers wrote.

Article source: https://www.nytimes.com/2023/04/21/business/dealbook/buzzfeed-news-shuts-down.html