[ad_1]
- Natalie Sherman
- new york business reporter
image source, Getty Images
When Donald Trump’s media company officially debuted on the stock market, its stock price soared.
Shares soared above $70 in early trading, giving the company a market value of more than $9 billion. It ended the day at around $58, still up more than 16%.
The long-awaited moment has arrived, injecting more than $200 million into Trump Media & Technology Group and handing the former president more than $4 billion worth of stock.
Analysts say this far exceeds the company’s performance guarantees.
Trump Media’s Twitter-like service Truth Social generated just $3.3 million in revenue and lost nearly $50 million in the first nine months of last year.
Since the platform was launched to the public in 2022 as an alternative to mainstream sites such as Facebook, 8.9 million accounts have been created, although it is unclear how many are active.
By comparison, Reddit, which recently went public, currently has a market value of about $11 billion. Boasting over 70 million users, he brought in $800 million in revenue last year.
Christy Marvin, CEO of SPACInsider, likened Trump Media, which trades under the ticker DJT, Trump’s initials, to a meme stock whose price is not tied to its business outlook.
Interest in Trump media is also growing among individual investors, many of whom are clearly Trump supporters, as opposed to Wall Street firms.
“Everyone was expecting a little crazy trading today and it turned out to be just that,” she said. “The real question is how it’s going to trade a week from now, two weeks from now, and no one really knows.”
The deal to take Trump Media public was first announced in 2021.
The move was made through what is known as a SPAC. This is a merger with Digital World Acquisition Corp., a publicly traded shell company created expressly to acquire companies and take them public.
The deal had been delayed by government investigations and other hurdles, but regulators approved it earlier this year and Digital World shareholders voted in favor last week.
Ahead of the company’s listing on the Nasdaq exchange, Trump media officials said it was a “pivotal moment” for the company and the broader media landscape.
“As a publicly traded company, we will passionately pursue our vision of building a movement to take back the internet from Big Tech censorship,” Trump Media chief executive and former Congressman Devin Nunes said in a statement. Ta.
“We will continue to fulfill our promise to the American people to serve as a safe harbor for free expression and stand up to the ever-growing army of suppressors of speech.”
The debut comes at a critical time for Trump, who is fighting for cash to pay legal fines and owns more than half of the company’s stock.
He is currently prohibited from selling his holdings for at least six months, making it difficult to reap a quick windfall.
The company’s board, which has many allies, including one of his sons, could change the rules, but analysts said they thought that was unlikely to happen anytime soon. Ta.
If Mr. Trump sells a significant portion of his holdings, it could have a negative impact on stock prices.
Investors also face other risks related to Trump’s political fate and the 2024 presidential election.
Michael Ohlrogge, a law professor at New York University, said a loss would likely cause stock prices to fall, but a win could have the opposite effect, especially with more demand from buyers looking to curry favor with Trump. He said this is true if it occurs.
However, Professor Ohlrogge said the current share price was “far above the fundamental value that anyone would think”.
[ad_2]
Source link
