Trump Media & Technology Group made a high-flying debut on the Nasdaq stock exchange, with trading of its shares under the ticker DJT briefly halted due to extreme volatility. Former President Donald J. Trump, the company’s biggest shareholder with a 60 percent stake, saw the value of his shares soar to approximately $4.6 billion. With a market value of nearly $8 billion after its first day of trading, Trump Media surpassed corporations like Mattel, Alaska Airlines, and Western Union.
Despite only making $3 million in revenue over most of the previous year and recording a loss of $49 million, Trump Media’s valuation is significantly high compared to other social media companies. The company’s main asset is Truth Social, which Mr. Trump describes as an alternative to Twitter for reaching supporters and criticizing opponents. Although investors often justify high valuations for companies operating at a loss based on anticipated growth, other social media companies trade at far lower price-to-sales ratios than Trump Media.
Truth Social, introduced in early 2022, has been downloaded 10 million times, with three million downloads in the previous year. The platform had five million desktop and mobile visitors last month, compared to 1.7 million for Gettr.com, but still a small fraction of Facebook’s three billion monthly active users. Mr. Trump currently has 6.5 million followers on Truth Social, after his account was suspended on Twitter where he had 87 million followers.
Trump Media & Technology Group was conceived in early 2021 by former “The Apprentice” contestants Andy Litinsky and Wes Moss, with the aim of creating a conservative media company centered on Mr. Trump after he was banned from Twitter following the Jan. 6 Capitol attack. Trump Media went public through a merger with a special purpose acquisition company (SPAC), Digital World Acquisition Corporation, following delays. The company’s shareholders are predominantly individual investors who see their investment as a show of support for Mr. Trump and an alternative social media platform.
While Trump Media’s soaring stock value has made Mr. Trump richer on paper, tapping into that wealth to fund his legal battles may not be straightforward. Restrictions prevent major shareholders, including Mr. Trump, from selling shares or using them as collateral for loans for at least six months following the merger. However, given Mr. Trump’s control over Trump Media, he and his allies could potentially waive these restrictions if needed. On the other hand, selling shares could lower the share price or limit further increases in value, presenting potential challenges for Mr. Trump in using his newfound wealth for legal expenses.
