Donald Trump’s media company enjoyed a stellar stock market debut on Tuesday.
Shares in Trump Media & Technology Group soared as much as 59% in New York trade.
By day’s end, the firm behind the Truth Social network was valued at close to $8 billion.
Analysts say that’s an extraordinary number for a company that reported barely more than $3 million in revenue over the first nine months of last year.
Though Wealth Alliance President Eric Diton says it looks like a classic meme stock, driven more by enthusiastic retail investors rather than any financial fundamentals:
“Roughly half the country is supporting Donald Trump, and he’s got some financial difficulties, and I think there’s a lot of people out there saying ‘I’m gonna buy this stock just to help the Donald’. And they’re doing it. Now, would I touch this stock personally? No.”
He’s been struggling to raise money for his campaign and legal expenses, as he faces four criminal cases.
Now his stake in TMTG is worth around $6 billion, though lock-up rules bar him from selling the stock, or borrowing against it, for six months.
As for Truth Social, it gets a $300 million cash injection as part of the deal.
But Vespula Capital founder Jeff Tomasulo says it remains hard to justify the lofty valuation put on its parent firm:
“No, the stock is probably worth… if you really… probably a $3, $4 stock, but it’s trading at 70 bucks or $69. But when you look at it from a fundamental perspective, you know you’re looking at a $3 stock.”
Recent figures show Truth Social had fewer than 9 million users signed up – a tiny fraction of the number on X.
That may not matter much for TMTG stock, if it’s really just a way to bet on Donald Trump’s future success.
TRUMP’S FINANCIAL WOES
Trump, who is facing four criminal trials in his race to US presidency, has been struggling to raise money for his campaign and legal expenses.
The company also provides a way for supporters of Trump to bet on his resurgence as a political figure, as evidenced by shares of shell company Digital World Acquisition nearly tripling in value this year.
TMTG’s rise on Tuesday led to losses for investors betting against the stock. Short sellers had racked up USD158 million in paper losses this year on their positions in Digital World Acquisition and TMTG, according to analytics firm S3 Partners.
“Today’s price action and valuation are completely out of kilter with the underlying business and its prospects,” said AJ Bell investment analyst Dan Coatsworth.
Donald Trump’s Media Firm Shares Jump 50% On Nasdaq Debut
In an official statement, Trump Media said that the symbol pays direct homage to the company’s former Chairman and Director, and the 45th President of the United States, Donald J Trump.
“We believe that the commencement of trading of DJT on the public markets testifies to Americans’ demands for free-speech platforms that reject the stifling censorship imposed by Big Tech,” the company said.
The former president is the majority shareholder in the company, whose directors include his son, Donald Trump Jr, and other close allies.
According to SEC filings, Trump will hold 78.75 million shares or 69 per cent stake in Trump media depending on the rate of share redemptions by DWAC shareholders. Trump is barred by the terms of the merger from selling his stakes for six months but the company’s board could grant him a waiver of that lock-up period. His stake is worth around $6 billion.
Despite the initial stock success, the company continues to struggle with financial difficulties including losses and high interest expenses. Trump Media’s Truth Social brought in just $3.3 million in revenue in the first nine months of last year and incurred losses of nearly $50 million.
