Shares closed at $57.99, up 16.1 percent, giving the company a market value of $7.85 billion. At one point the stock was up about 59 percent. Trump holds a nearly 60 percent ownership stake in the company, now worth about $4.6 billion.
Many of those investing in Trump Media are small-time investors either trying to support Trump or aiming to cash in on the mania, instead of big institutional and professional investors. Those shareholders helped the stock of Digital World more than double this year in anticipation of the merger going through.
Truth Social launched in February 2022, one year after Trump was banned from major social platforms including Facebook and X, formerly Twitter, following the Jan. 6 insurrection at the US Capitol. He’s since been reinstated to both but has stuck with Truth Social.
On Truth Social Tuesday, users were posting about being shareholders or seeking tips on how to buy shares.
One user urged conservatives to get behind the DJT stock and sent it over $100 per share to drive the liberals insane! Another declared: Get yourself a piece of #DJT stock if your a true MAGA supporter.
A day earlier, Trump Media CEO Devin Nunes, a former House Republican, said, As a public company, we will passionately pursue our vision to build a movement to reclaim the Internet from Big Tech censors.
Despite the enthusiasm, investors could experience a bumpy ride. For one, they’re betting on a company with uncertain prospects of turning a profit. Trump Media lost $49 million in the first nine months of last year, when it brought in just $3.4 million in revenue and had to pay $37.7 million in interest expenses.
In a recent regulatory filing, the company cited the high rate of failure for new social media platforms, as well as its expectation that its operations will lose for the foreseeable future as risks for investors.
Research firm Similarweb estimates that Truth Social had roughly 5 million active mobile and web users in February. That’s far below TikTok’s more than 2 billion and Facebook’s 3 billion — but still higher than other alt-tech rivals like Parler.
However, Trump Media has said it doesn’t keep track of some numbers that rivals use as key measures of their performance, such as average revenue per user or active user accounts. It says it wants to focus on the long-term instead of short-term decision-making.
For that long term, though, skeptics see struggles ahead for a company that’s estimated to have far fewer users than rivals in a business where gaining a critical mass is key.
I think there is a possibility of, sooner or later, the stock price falling by 95 percent, said Jay Ritter, a professor and expert on initial public offerings of stock at the University of Florida’s Warrington College of Business.
Brian Dunn, director of the Institute for Compensation Studies at Cornell University, compared the fervor for Trump Media shares to the meme stock craze that boosted shares of companies such as GameStop and AMC Entertainment to exorbitant heights in 2021.
Like any meme stock or fad, as long as there’s a greater fool to buy you out for what you paid for it, than you can continue to prosper, Dunn said, warning that small investors could end up holding the bag when the music stops.
On Monday, Trump told reporters that Truth Social is doing very well. It’s hot as a pistol and doing great. On Tuesday, he posted I LOVE TRUTH SOCIAL, I LOVE THE TRUTH! on the platform.
The company, which is based in Florida, said in a recent regulatory filing that it is highly dependent on the popularity and presence of President Trump. Trump Media has acknowledged that there are risks associated with Trump’s outsized influence.
If the former president were to limit or discontinue his relationship with the company for any reason, including due to his campaign to regain the presidency, the company would be significantly disadvantaged, it said in a filing ahead of the merger with Digital World.
Acknowledging Trump’s involvement in numerous legal proceedings, the company noted that an adverse outcome in one or more of the cases could negatively affect Trump Media and Truth Social.
