Trump’s media company soars in early trading
Donald Trump’s social media platform is now trading on the stock market.
The parent company of Truth Social, Trump Media & Technology Group, went public Tuesday morning under the ticker DJT, short for Donald J. Trump. The stock was trading at about $67 early Tuesday afternoon, up 33%.
The public listing was made possible by Trump Media’s merger with Digital World Acquisition, a special purpose acquisition company, or SPAC. Digital World’s shareholders voted in favor of the merger Friday, and Trump Media took Digital World’s place on the Nasdaq on Tuesday.
How much is Truth Social worth?
Before trading opened Tuesday, Truth Social’s parent company had a market value of about $6.8 billion. Because Trump owns about 79 million of the 135 million outstanding shares, his stake in the company was worth about $4 billion.
It’s a pricey valuation, especially for a company that has lost tens of millions of dollars since its 2021 launch and generated just over $3 million in revenue during the first nine months of 2023.
“The valuation of the business is rich relative to its underlying fundamentals, but I would not get in front of it in the near term,” Thomas Hayes, chairman of Great Hill Capital, told Reuters.
“This valuation may be more of a proxy on the enthusiasm of supporters for Trump than a reasonable estimate of underlying business prospects.”
What is Trump’s net worth?
Truth Social going public means a massive boost to Trump’s net worth, at least on paper.
Trump is not allowed to sell his shares or use them as collateral for a bond for the next six months. He would need approval from the Trump Media board to lift that restriction.
Trump must post a $175 million bond as he appeals the full $454 million civil fraud judgment against him. He has also been ordered to pay $83.3 million after a defamation trial loss to advice columnist E. Jean Carroll.
Truth Social’s ticker, DJT, was likely picked because research shows that familiar names, such as a former president’s initials, can help a company’s stock performance. One study from Pomona College in 2019 verified earlier research that found clever tickers tend to perform better, partly because they are more memorable to investors.
What is Digital World Acquisition?
Digital World is a SPAC, also known as a blank check company. These publicly traded shell companies exist to acquire or merge with private companies and take them public.
Truth Social’s merger with Digital World was announced in 2021, when the number of companies going public via SPACs surged. The investment vehicles have since faced criticism for being bad deals for retail investors.
Why did Trump launch Truth Social?
Truth Social was founded after Trump was booted from major social media platforms following the Jan. 6, 2021, attack on the Capitol.