Trump Media’s Stock Debut: A Resounding Success on Wall Street

Trump Media's Stock Debut: A Resounding Success on Wall Street

Trump Media’s Stock Debut: A Resounding Success on Wall Street

Shares in Donald Trump’s media company experienced a significant surge as the firm made its formal debut on the stock market. Initially, shares soared past $70 in early trade, resulting in a market value exceeding $9 billion. Although they ended the day at around $58, still up more than 16%, this boost injected over $200 million into Trump Media & Technology Group and granted the former president a stake worth more than $4 billion.

However, analysts have expressed skepticism regarding the company’s performance justifying such high valuations. Trump Media’s Truth Social, a platform akin to Twitter, reported meager revenue of $3.3 million in the first nine months of the previous year, accompanied by losses nearing $50 million. Despite claiming 8.9 million account creations since its public launch in 2022, it remains uncertain how many of these accounts are active. Comparatively, Reddit, with a market value of approximately $11 billion, boasts over 70 million users and generated $800 million in revenue last year.

The interest in Trump Media has been likened to a meme stock, with prices seemingly disconnected from business prospects. Individual investors, many of whom are purportedly Trump supporters, have contributed to this fervor. However, the sustainability of this enthusiasm remains uncertain in the coming weeks.

Trump Media’s listing on the Nasdaq exchange was achieved through a SPAC merger with Digital World Acquisition Corp, a publicly listed shell company. Despite delays due to regulatory scrutiny, the deal was ultimately approved earlier this year. Trump Media officials heralded the listing as a pivotal moment, vowing to challenge Big Tech censorship and champion free expression.

For Mr. Trump, the debut arrives amidst financial constraints, with proceeds from the stock sales potentially crucial for addressing legal penalties. However, given restrictions barring him from selling his shares for at least six months, immediate access to the windfall appears unlikely. Additionally, the company’s board, comprising allies including one of his sons, may hesitate to alter these rules immediately.

Investors face additional risks tied to Mr. Trump’s political future. While a potential loss could dampen the share price, a victory in the 2024 presidential campaign might yield the opposite effect, attracting further demand from supporters seeking to align with Mr. Trump’s agenda. Nevertheless, analysts caution that the current share price far exceeds its fundamental value, raising concerns about sustainability.


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