Experts Warn: The Illogical Multibillion-Dollar Valuation of Trump’s Truth Social as it Goes Public

Trump Media & Technology Group Goes Public

For the first time in nearly three decades, a portion of Donald Trump’s business empire has made its debut on the stock market. Trump Media & Technology Group, the parent company of Truth Social, a struggling social media platform, began trading under the ticker symbol “DJT.” The stock opened strong, surging 56% to $78 before settling at $57.99 by the end of the day.

Untethered Valuation and Stock Surge

Despite Trump Media’s financial struggles, the market has assigned it a staggering valuation of almost $11 billion. Analysts warn that this valuation is disconnected from reality, with some estimating the true value to be closer to $2 per share. The stock surge is reminiscent of meme stocks like GameStop and AMC, driven by retail traders’ frenzy.

Trump’s Windfall and Financials

Trump, who holds a significant stake in Trump Media, saw his shares valued at nearly $6 billion at the opening price. However, the company’s financials paint a different picture, with just $3.4 million in revenue and $49 million in losses for the first nine months of last year. The disconnect between revenue and valuation raises concerns about the stock’s sustainability.

Challenges and Decline of Truth Social

Truth Social faces challenges as it lags far behind competitors like X (formerly Twitter) and Facebook in user numbers. With only 494,000 monthly active users in the US, Truth Social’s user base is shrinking, down 51% year over year. These issues, coupled with its declining website traffic, point to an uncertain future for the platform.

Risks and Unique Factors

Trump Media’s valuation, largely driven by speculation and momentum trading, poses risks for investors. The company’s fate is closely tied to Trump himself, with potential legal issues and bankruptcy history raising concerns. Trump’s key man risk, coupled with ongoing legal proceedings, adds to the uncertainty surrounding the company’s future.

Read More of this Story at – 2024-03-26 20:21:00

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