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Backed by an army of devoted supporters, Donald Trump made a spirited debut on the Nasdaq stock exchange on Tuesday.
Trump Media & Technology Group stock soared like helium from the opening bell until late in the trading day, when Trump’s eponymous social media company closed in on reality with a market cap of about $8 billion. , maintained most of its gains.
It was also a great trading day for Trump, the Republican presidential candidate and the largest shareholder in Trump Media. The stock rose to $79.38, but fell by the end of the day, closing at $57.99, close to the day’s low.
His 60% stake in Truth Social’s parent company, which currently trades under the ticker DJT, is worth about $4.5 billion on paper. And if the stock price stays above $17.50 per share for an extended period of time, tens of millions of additional shares will be issued, most of which will go to Mr. Trump.
Enthusiasm in the MAGA ranks was tempered by more sober assessments from stock market observers. They argue that Trump Media’s reputation is divorced from the business realities the company faces.
The company’s flagship product, Truth Social, President Trump’s megaphone of choice, is a minor player in a social media landscape dominated by giants like Facebook owner Meta. Trump Media, meanwhile, has tens of millions of dollars in losses, sparse revenue and has struggled to attract advertisers and users since its founding in 2021.
This success is largely due to Trump, one of Truth Social’s most prolific users, with nearly 6.8 million followers, the most on the platform. President Trump has 34 million followers on Facebook, 24 million followers on Instagram, and more than 87 million followers on X.
“It’s hard to come up with a reasonable metric to arrive at this valuation,” Derek Horsmeyer, a finance professor at George Mason University in Virginia, told USA TODAY.
One Day Pop was typical of the so-called meme stocks of recent years, such as video game retailer GameStop. Trump supporters rallied on social media to drive up the stock even before the merger with Digital World Acquisition Corp. was completed. Purpose acquisition companies, or SPACs, that are already listed on the Nasdaq.
The difference here may be that fans of the former president may hold on to the stock rather than dump it.
Jay Ritter, a finance professor at the University of Florida, said trading was very active. The number of tradable shares, known as public shares, is approximately 28 million. But on Tuesday, more than 52 million shares changed hands. In fact, trading was so intense that the Nasdaq briefly halted trading after the opening bell. Typically most stocks trade he less than 1% per day.
“Obviously, a lot of the buyers and holders are people who are buying it for ideological reasons and plan to hold it for a while,” Ritter said.
It’s not that different from the online traders, retail investors, small brokers and others who organized on the social media platform Reddit to drive up GameStop’s price and take on the hedge funds that were betting on the company and shorting the stock. .
“In that respect, GameStop investors also did so for ideological reasons,” Ritter said. “But after the stock price went up, they sold off and the stock price crashed.”
No one knows when the Trump media bubble will burst, he said. Just because you’re a Trump supporter doesn’t mean you’ll be a Trump supporter forever, Ritter said.
“Anything can happen in the short term,” he says. “But in the long term, we are confident that the percentage will decrease significantly.”
How much is Truth Social worth?
These Trump Media stocks have become a critical lifeline in posting bail in President Trump’s appeal of his civil fraud conviction.
The New York Court of Appeals gave Trump an additional 10 days to post bail and reduced the amount to $175 million. Mr. Trump is struggling with the weight of not only a $454 million civil fraud judgment, but also an $83.3 million loss in a defamation case he advised columnist E. Jean Carroll.
Trump’s interests are all on paper for now. He told Trump Media’s seven-member board of directors that it must lift restrictions that prevent Trump and other insiders from selling stock or using bonds as collateral for the next six months. There is. Trump’s interests are all on paper for now. He will require Trump Media’s seven-member board to lift restrictions that prevent Trump and other insiders from selling stock or using it as collateral for bonds over the next six months. Dew.
The company’s board of directors includes allies including his son Donald Trump Jr. and three former members of his administration, and the company will hold a secondary offering in the coming months that would allow Trump to cash out some of his holdings. There is a possibility that it will.
What is Trump’s net worth?
Truth Social’s initial public offering, at least on paper, would mean a significant increase in Trump’s net worth.
Trump Media stock and a reduction in the bond he is posting in a New York civil fraud case boosted his net worth by more than $4 billion on Monday, making him the world’s 500 richest person for the first time on the Bloomberg Billionaires Index. .
Why is Truth Social’s ticker DJT?
Research shows that well-known names, such as the initials of a former president, can influence a company’s stock performance.
A 2006 study by psychologists at Princeton University found that stocks with easy-to-pronounce tickers tended to perform better during the first few days of trading. Another study conducted by Pomona College in 2019 validated previous research that found smart tickers tend to perform better 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.
The merger between Truth Social and Digital World was first announced in 2021, when the number of companies going public via SPACs skyrocketed. The investment vehicle has since come under fire for being a bad deal for retail investors.
Why did Mr. Trump launch Truth Social?
Truth Social was founded after President Trump was banned from major social media platforms following the January 6, 2021, attack on the Capitol.
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