Shares in Donald Trump’s media company, Trump Media & Technology Group, saw a significant surge as the firm made its formal debut on the stock market. The shares soared past $70 in early trade, giving the company a market value of over $9 billion. By the end of the day, the shares were still up more than 16%, closing at around $58.
Despite the impressive market debut, analysts are skeptical about the firm’s performance justifying such high valuations. Trump Media’s Truth Social, a Twitter-like service, only generated $3.3 million in revenue in the first nine months of last year and reported a loss of nearly $50 million. In comparison, Reddit, which recently went public, has a market value of about $11 billion and brought in $800 million in revenue last year.
The interest in Trump Media has been driven by individual investors, many of whom are Trump supporters. Kristi Marvin, chief executive of SPACInsider, likened the trading of Trump Media shares to a meme stock, where prices are disconnected from the actual business prospects.
The listing of Trump Media on the stock market was delayed by government investigations and other hurdles, but it finally came to fruition through a SPAC merger with Digital World Acquisition Corp. Trump Media officials see this as a pivotal moment for the firm and the wider media landscape, with CEO Devin Nunes emphasizing their commitment to free expression and standing up against censorship.
However, the debut also comes at a critical time for former President Donald Trump, who owns more than half of the company’s shares but is currently barred from selling them for at least six months. The company’s board, which includes allies like one of his sons, could potentially change this rule, but analysts believe it is unlikely to happen immediately.
Investors face risks tied to Trump’s political fortunes and his potential 2024 presidential campaign, with a loss expected to impact the share price negatively. Despite the excitement surrounding the stock’s debut, some experts believe that the current share price is significantly inflated and not reflective of the company’s true value.
