What's PR Got to Do With It?

"PR" can mean a number things.

Typically, a PR (press release) is any news item that’s distributed by a company, concerned party, or publicist and is not actually written by, originated by, or researched by a real reporter and editor. Some companies keep their PR (public relations) division in house, but for bigger events they usually hire a big PR firm. The publicists and marketing geniuses (spawns of Satan) then try to get the word out about the company/event to the public. The PR (public relations) people do this by sending out PR (press releases) to everyone and their mother, with special emphasis on hounding the media.

In the normal media world, three things happen when a magazine/newspaper/TV reporter or news editor receives a piece of PR: (1) If they are wise, they throw it in the trash; (2) If they are not too lazy, they try to figure out whether or not there is actually anything newsworthy buried inside the flack-written fluff that is the basis of every PR; (3) If they are a regular, good ol' jurno hack, they try to figure out if they will be able to get any cool interviews or free electronics or movie/concert tickets or stock options or sex out of the publicist if they cover the “news” found in the PR; (4) The reporter/editor will research and verify (or contest) the info in the PR and then begin writing a story based upon the PR, bringing in outside research and doing interviews with people and trying to find the truth, unless they're FOX News or very drunk, in which case they'll just report the PR as fact or plagiarize it verbatim.

However, in the world of stocks, PRs are released directly onto newswires and are then avidly devoured by the public without ever being touched by reporters or editors, so anyone following the stock PR wires needs to do their own extensive DD (due diligence) to figure out what is really relevant and what is bullshit. With many PR wires, the company that wants to issue a news release just has to pay the wire service a fee, and then, bingo-presto, it’s posted online.

At the same time, the company in question and their publicity team may not actually be behind the PRs you see -- it could be the MMs (market makers) that have hired a PR team to release publicity items to help make the stock go up or down. Typically, stock-related PR found on the legitimate news wires will not be lies, per se, since people could get in trouble for distributing completely false information, but the info will likely be manipulated to the furthest extent the law allows, to help whatever party is releasing or paying for the PR.

But since the general media doesn't pay much attention to all the penny stocks out there, penny traders have to rely on PR to a great degree. And the PR, in turn, affects what the stock media reports on, what the stock bulletin boards talk about, and what the stock gurus recommend. And many of the stock-news services that release info on the wires and distribute info through newsletters and websites and spam are glorified PR firms in their own right – they’re paid (with money and/or stock) to recommend the stock they’re flaunting. Nonetheless, even when PR is mostly BS, it can still affect the PPS (price per share) or P/S (market cap divided by revenues, or stock price divided by sales price per share) and is rarely bad new (which is kept strictly on the QT). But you can use PR to your advantage if you’re on top of the news.

1 comment:

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