Trump Social Media Soars Nearly 50% in First Day of Trading
NEW YORK – Shares of Donald Trump’s social media company saw a remarkable surge of almost 50% on its first day of trading on the Nasdaq, propelling the value of Trump’s significant holdings in the company, as well as the smaller stakes of his supporters who purchased shares as an act of solidarity with the former president.
A Big Jump for Trump Media & Technology Group Corp.
Trump Media & Technology Group Corp. was acquired by a blank-check company called Digital World Acquisition Corp., which resulted in Trump Media taking Digital World’s place on the Nasdaq stock exchange. Before trading commenced, Trump Media had a market value of about $6.8 billion, a figure that is expected to increase significantly if the early gains in shares persist. The shares are being traded under the ticker symbol “DJT,” with Trump holding a nearly 60% ownership stake in the company. As of 9:55 a.m. ET, the shares were up 47% to $73.50.
Small Investors Paving the Way
Most of Trump Media’s investors are individuals, ordinary people who are either trying to support Trump or hoping to capitalize on the enthusiasm surrounding the company. These small investors significantly contributed to the rise in Digital World’s stock price in anticipation of the merger. However, these investors may face some uncertainty. They are betting on a company with uncertain prospects of profitability. In the first nine months of last year, Trump Media incurred a loss of $49 million, generating revenue of only $3.4 million while dealing with interest expenses amounting to $37.7 million. In a recent regulatory filing, the company cited the high failure rate of new social media platforms as well as the expectation of continued losses “for the foreseeable future” as potential risks for investors.
The Rise of Truth Social
The launch of Truth Social, Trump’s social media platform, took place in February 2022, a year after he was banned from major social platforms following the January 6 insurrection at the U.S. Capitol. Despite being reinstated on these platforms, Trump has decided to stick with Truth Social.
On the same day that Trump’s social media company made its debut on the stock market, the former president appeared in court in New York for a criminal case involving hush money payments made to cover up claims of marital infidelity. Following the hearing, Trump expressed confidence in the success of Truth Social, stating that it is “doing very well” and is “hot as a pistol.”
Challenges and Risks
Though Truth Social has not yet disclosed its user numbers, that information is expected to be made public now that the company is publicly traded. According to research firm Similarweb, Truth Social had approximately 5 million active users across mobile and web platforms in February. While that figure is substantially lower than the user bases of TikTok and Facebook, it is still higher than other alternative social media platforms such as Parler and Gettr.
Beyond competition in the social media industry, Trump Media faces other risks, including dependence on Trump’s popularity and presence. The company has acknowledged that its success is closely tied to the former president, meaning that if Trump were to limit or sever his association with the company for any reason, Trump Media would suffer significant drawbacks. Additionally, the company highlighted the potential negative impact of legal proceedings involving Trump, as well as the possibility that Trump’s voting power as a controlling stockholder may not always align with the interests of all shareholders.
Volatility in the Market
Investors should be prepared for volatility in the shares of Trump Media. Prior to the shareholder vote on the merger, Digital World shares experienced a significant increase in value. The vote resulted in a nearly 14% drop in shares, but the stock rebounded strongly on Monday, recording a 35% gain.
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