Trump's media company debuts on Wall Street valued at nearly $8B

Trump's media company debuts on Wall Street valued at nearly $8B

FILE PHOTO: In this illustration from February 21, 2022, The Truth social network logo is seen behind a woman holding a smartphone.

Shares of Donald Trump's Trump Media & Technology Group soared 59% in their Nasdaq debut on Tuesday, boosted by supporters of the former US president , and provides him with a potential windfall as he contends with the costs of several legal cases.

TMTG's undiluted market capitalization topped $10 billion at an intraday high of $79.38 per share, an astronomical figure for a company that reported an operating loss of $10.6 million in the first nine months of 2023 and revenue of just $3.4 million. .

The stock closed up 16% at $57.99, valuing the company at nearly $8 billion.

Trump's majority stake in TMTG was last valued at about $6 billion, although a six-month lock-up restriction could prevent him from selling or borrowing his stake.

Read: Trump’s social media company goes public, could net billions

TMTG made its stock market debut in 2021 after announcing a merger with blank-check company Digital World Acquisition Corp, but faced setbacks and delays.

Trump's financial woes

Shares of Digital World and newly listed TMTG have soared nearly 600% combined since the deal was announced, cementing TMTG's status as one of Wall Street's so-called meme stocks, popular with retail traders and whose movements can be tracked through social media. Pushed by posts in the media.

“The business is highly valued relative to its fundamentals, but I wouldn't be involved in it in the short term,” said Thomas Hayes, chairman of Great Hill Capital.

“This valuation may reflect more of the enthusiasm of Trump supporters than a reasonable estimate of the underlying business prospects.”

Trading in the stock under the new ticker symbol “DJT” was halted briefly after the market opened due to volatility.

Read: Factbox: How much is Trump worth?Check out his assets and income

Stocktwits, a social media and trading platform focused on retail traders, ranks it as the hottest stock.

Shares of Digital World Acquisition Corp (now TMTG) surged more than 35% on Monday after the merger was completed.

Trump faces four criminal trials during his campaign for U.S. president and has struggled to raise campaign funds and legal fees.

The company also offers Trump supporters a way to bet on his resurgence as a political figure, as evidenced by the stock price of the shell company Digital World Acquisition nearly tripling this year.

TMTG's gains on Tuesday led to losses for investors who were short the stock. Short sellers have suffered $158 million in paper losses this year from their positions in Digital World Acquisition and TMTG, according to analytics firm S3 Partners.

“Today's price action and valuation are completely inconsistent with the underlying business and its prospects,” said AJ Bell investment analyst Dan Coatsworth.

divestment plan

The deal will also inject $300 million in cash into TMTG's social media platform Truth Social.

Truth Social was launched in February 2022 in an attempt to take advantage of bans on Trump's accounts on social media platforms such as Twitter (now X) and accounts operated by Meta Platforms. It also appeals to users who believe other social media platforms limit conservative voices.

According to regulatory filings, Truth Social had 8.9 million registered users in February. According to the latest official data, as of June 2022, X had 238 million daily active users, while Facebook and Reddit had 2.1 billion and 73 million daily active users respectively.

At the height of Tuesday's rally, Truth Social was valued at more than $1,000 per registered user, while Reddit was valued at $147 per active user, X was at $80 and Snapchat was at $46.

Digital World said in a filing last month that Trump may divest his stake in Truth Social and cease involvement in its management depending on the progress of his presidential campaign.

Your subscription could not be saved. please try again.

Your subscription has been successful.

The blank-check company signed a merger agreement with Trump's company in October 2021 and has been the target of an investigation by the U.S. Department of Justice since then.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *