Shares of Donald Trump’s Trump Media & Technology Group (TMTG) witnessed a meteoric rise of nearly 59% in their Nasdaq debut on Tuesday. The surge, which comes amid ongoing legal battles for the former U.S. president, has generated significant potential financial gains for Trump which could shore up his campaign and legal defense war chests.
Trading as “DJT,” with shares rising to a high of $79.38, TMTG’s market capitalization soared past $10 billion, an astonishing figure given the company’s reported operating loss of $10.6 million for the first nine months of 2023 on revenue of just $3.4 million.
The rally provides a major boon for former President Donald Trump who has a substantial stake in TMTG, valued at approximately $5.89 billion. The stock’s closing price on its first trading day settled at $57.99, marking a 16.10% gain. Trump is, however, limited in his ability to sell or leverage his holdings currently as he faces lock-up restrictions for six months.
🚨BOOM: Trumps Net Worth SURGES to over $6Billion as Truth Social stock goes public after Democrats attempted to bankrupt him pic.twitter.com/xPixyfmrKB
— Benny Johnson (@bennyjohnson) March 26, 2024
TMTG’s surge follows its 2021 merger with the special purpose acquisition company Digital World Acquisition Corp (DWAC). Shares in DWAC, now TMTG, have had a skyrocketing increase of more than 700%. The surge solidifies TMTG’s status to some as a prominent “meme stock” – shares that retail traders with little or no experience place bets on, influenced by social media hype.
Thomas Hayes, chairman of Great Hill Capital, noted the rich valuation of TMTG relative to its financial fundamentals, suggesting that the stock’s performance may be influenced more by Trump supporters’ fervor for supporting the former president. “This valuation may be more of a proxy on the enthusiasm of supporters for Trump than a reasonable estimate of underlying business prospects.”
Meanwhile, with the soaring price of TMTG, short-sellers have started to face some serious losses. Investors who bet against the stock have already accrued $158 million in paper losses, according to estimates from the firm S3 Partners.
Furthermore, the merger infuses $300 million in cash into TMTG’s social media platform Truth Social, which launched in February 2022 with a pitch to counteract the widespread censorship of Trump by mainstream social media. The platform says that it racked up 8.9 million sign-ups as of February 2023.
The blank-check firm signed its merger agreement with Trump’s company in October 2021 and since then, has been the target of investigations by the U.S. Department of Justice.
In February, Truth Social had 8.9 million sign-ups, according to a regulatory filing. X had 238 million daily active users as of June 2022, as per the latest available official data, while Facebook and Reddit had 2.1 billion and 73 million.
At the height of Tuesday’s rally, Truth Social was valued at over $1,000 per signed-up user, compared with $147 per active user for Reddit, $80 for X and $46 for Snapchat.
Digital World said in a filing last month that Trump may divest his stake in Truth Social and cease any involvement in its management based on how his bid for president goes.
