Trump media company sees a surge in shares as it makes its debut on Wall Street

Donald Trump’s Trump Media & Technology Group (TMTG) saw a remarkable surge of up to 59% on Tuesday during its Nasdaq debut. This boost, driven by the support of former US president’s followers, presents a potential financial gain for Trump amidst various legal battles.

At its peak of USD79.38 per share, TMTG’s market value exceeded USD10 billion without considering dilution, an extraordinary valuation given the company’s reported operating loss of USD10.6 million for the first nine months of 2023, with revenue standing at just USD3.4 million.

Trump’s majority stake in TMTG was last valued at around USD6 billion, but lock-up restrictions for six months may hinder him from selling or leveraging his shares.

TMTG’s entry into the stock market comes after its merger with Digital World Acquisition Corp, announced in 2021 but faced with obstacles and delays.

Since the deal announcement, both Digital World and the newly-listed TMTG have surged nearly 600%, solidifying TMTG’s position as one of Wall Street’s meme stocks, favored by retail traders and influenced by social media posts.

“The business valuation appears high compared to its fundamentals, but I wouldn’t bet against it in the short term,” stated Thomas Hayes, chairman of Great Hill Capital.

“This valuation could reflect Trump supporters’ enthusiasm rather than a realistic assessment of business potential.”

Trading under the new ticker “DJT” was briefly paused due to volatility after the opening bell.

Retail trader-focused social media and trading platform Stocktwits identified it as the most trending stock.

Digital World Acquisition Corp’s shares, now TMTG, soared over 35% on Monday following the merger completion.

Trump’s Financial Challenges

Trump, amidst facing four criminal trials during his presidential campaign, struggles to raise funds for both his campaign and legal fees.

Moreover, the company offers a platform for Trump supporters to invest in his potential political comeback. This is evident in the remarkable surge in shares of shell company Digital World Acquisition, nearly tripling in value this year.

TMTG’s surge on Tuesday resulted in losses for investors betting against the stock. Short sellers incurred approximately USD158 million in paper losses this year on their positions in Digital World Acquisition and TMTG, according to analytics firm S3 Partners.

“Today’s stock price and valuation are significantly disconnected from the actual business and its future prospects,” commented Dan Coatsworth, investment analyst at AJ Bell.

The agreement will also infuse USD300 million in cash into Truth Social, a social media platform owned by TMTG.

Launched in February 2022, Truth Social aimed to capitalize on the ban of Trump’s accounts on platforms like Twitter (now X) and those operated by Meta Platforms. It appealed to users who felt conservative voices were being stifled on other platforms.

As of February, Truth Social had 8.9 million sign-ups, while X had 238 million daily active users as of June 2022, according to the latest official data. Facebook had 2.1 billion daily active users, and Reddit had 73 million.

During Tuesday’s surge, Truth Social was valued at over USD1,000 per signed-up user, in contrast to USD147 per active user for Reddit, USD80 for X, and USD46 for Snapchat.

In a filing last month, Digital World stated that Trump might sell his stake in Truth Social and step away from its management, depending on the outcome of his presidential bid.

The blank-check firm entered into a merger agreement with Trump’s company in October 2021, which has since been under investigation by the US Department of Justice.

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