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Donald Trump’s Atlantic City casino and resort company has lost money every year since its inception and filed for bankruptcy in 2004.
new york
CNN
—
Starting Tuesday, there will be a new company on the Nasdaq, Trump Media & Technology Group, whose stock price will be traded on the DJT.
DJT, of course, stands for Donald John Trump, and the company’s the meaning to exist — gave a megaphone (and injected a lot of money) to the would-be Republican candidate. The company’s flagship product, Truth Social, was President Trump’s quick and dirty solution to banning virtually all mainstream social media apps in the wake of the Jan. 6, 2021, attack on the U.S. Capitol.
But the social media app never became a blockbuster, and it’s unclear how the company will make money going forward.
If it all looks familiar, it’s because we’ve been down this road before.
Trump Media may be a new company, but its stock ticker is a throwback to Trump’s only other publicly traded company. President Trump gave the same initials to his Atlantic City casino business, Trump Hotels and Casino Resorts, when the company went public in 1995.
It didn’t work. At least not for investors.
Trump Hotel and Casino Resort failed to turn a profit and eventually filed for bankruptcy in 2004, wiping out its shareholders.
President Trump’s company has lost money every year since its founding, posting more than $600 million in losses — including the Trump Taj Mahal, a place so lavish that Trump called it the “eighth wonder of the world.” That’s despite owning several high-end casinos, including one in Atlantic City.
The stock lost 90% of its value in the first five years after becoming a public company.
But Trump himself has fared well. From 1995 to 2004, Trump earned about $40 million in salary, bonuses and options, not unusual for a CEO. There were also less common ways to make money, such as consulting contracts, licensing agreements, and reimbursement for private jets and golf course fees. These unusual payments accounted for about half of the money Trump made during his tenure as the company’s leader.
“The money I pulled out of it was incredible,” Trump told The New York Times in 2016.
Mr. Trump’s stock holdings were wiped out in bankruptcy. But he continued to make millions from the company after it emerged from bankruptcy, taking in $6.1 million from the renamed Trump Entertainment Resorts, which traded under a new ticker. — TRMP.
However, the new name and ticker did not help the company. It lost $2 billion over five years and filed for bankruptcy for the second time in 2009.
Like its predecessor, the new DJT is enjoying market excitement following the merger of President Trump’s media entity and Digital World Acquisition Corporation. DWAC stock soared 40% on Monday and is up more than 170% in the past six months.
However, a look at the fundamentals shows that the stock is highly overvalued. Trump Media earned just $3.4 million in the first nine months of last year, according to SEC filings.
“Stock prices are clearly in a bubble,” Yale law professor Jonathan Macy told my colleague Matt Egan last week. “No rational investor would take a stock at face value, especially if they had to hold it for a long time.”
Meanwhile, Truth Social’s user base is shrinking, even smaller than that of X, formerly known as Twitter.
At current prices, Trump’s stock is worth about $4 billion. In theory, the stock cannot be sold for several months after it begins trading. However, if the company’s board of directors allows it, it may be possible to avoid the so-called lock-up period.
And now that President Trump’s civil fraud bond obligations have been reduced by more than 60%, boards may be more amenable to giving the green light. To make up the shortfall, Trump will need to sell a small portion of his Trump Media stock to cover the amended bond payment ($454 million to $175 million).
— CNN’s Matt Egan contributed reporting.
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