Former President Donald Trump is raving about his new social media platform, Truth Social, which has brought billions to his net worth since its parent company, Trump Media & Technology Group, went public on March 26. Despite a drop in share value, Trump remains optimistic about the platform, which bears the ticker symbol “DJT” and has a market capitalization of $5.2 billion, putting it in line with companies like Macy’s and Planet Fitness. However, the company reported losses of over $58 million in 2023, with only 9 million users signed up, a fraction of its competitors.
Most stocks are valued based on metrics like price-to-sales ratio, where companies on average trade at multiples of 5.1 times annual revenues. In comparison, Trump’s company, TMTG, is trading at a multiple of 1,270. Despite this, a TMTG spokesperson stated that the company has no debt and over $200 million in the bank, aiming to establish Truth Social as a free-speech platform for Americans. However, skeptics believe that the valuation of DJT is unrealistic, and the company faces challenges in generating revenue.
Forbes has assessed the potential value of Truth Social using three different methods. The market value of the company is estimated at $5.2 billion, with Trump’s share valued at $3 billion. However, the transaction value based on institutional investor interest suggests a lower valuation of around $800 million. In terms of fundamentals, the business generated just over $4 million in revenue in 2023 and has likely fewer than 7 million active users, projecting a lower valuation between $40 million to $90 million.
Trump’s majority shares in TMTG are currently under a lock-up agreement, restricting his ability to access funds until September. This poses a risk if he decides to sell his shares close to the presidential election, potentially causing the price to plummet. Despite the uncertainty surrounding Truth Social’s true value, Trump remains confident in the platform’s success, attributing its high valuation to his significant presence and influence on social media. Critics, however, question the sustainability of DJT’s valuation and its ability to compete in the crowded social media landscape.
