[ad_1]
Trump Media assumed the shares held by special purpose acquisition company Digital World Acquisition as part of a merger agreement that first began in 2021 and was approved by shareholders last week.
Trump owns 60% of Trump Media, or about 78 million shares, currently worth more than $4.6 billion.
However, the company’s valuation is contradictory to its business performance. Trump Media made about $3.4 million in revenue and lost $49 million in the first nine months of 2023, according to Securities and Exchange Commission filings.
Trump Inc.’s stock price ended Tuesday at $58, just a few dollars below the stock price of the bulletin board platform Reddit, which went public last week. Last year, Reddit generated more than $800 million in revenue for him.
The trading frenzy has made Trump Media one of the biggest contributors to President Trump’s net worth, according to Bloomberg, and on Monday he was added to the list of the world’s 500 richest people. He said it was his first time joining.
But a common deal clause known as a lockup prevents Trump from selling or using his stock as collateral for six months. Lockups are intended to give investors confidence that major shareholders will not immediately cash out if a deal goes through. .
When Trump Media and Digital World announced plans to merge in 2021, Digital World’s stock price also skyrocketed to a high of $175 per share. But its stock price plummeted in the days that followed, and the company faced years of low stock value and high volatility, partly due to merger delays. The company’s stock was selling for about $17 earlier this year.
About 400,000 retail investors bought Digital World stock, but the official transition to Trump Media appears to have energized a new class of investors. On Reddit’s popular subreddit WallStreetBets, many posters are calling for people to pour money into “meme stocks” for short-term gains: “Let’s go to the moon!!” one post said. Ta.
On Monday, Trump Media CEO Devin Nunes, a former Republican congressman from California, said in a statement that the company is working to “take back the internet from Big Tech’s censorship” and “protect the growing number of speech suppressors. We will stand up against the army of ”
The merger will give Trump Media more than $300 million that Digital World raised from investors in 2021, which the company will use to invest in online infrastructure that supports advertising on Truth Social, its main source of revenue. He said he plans to use the money for expansion.
But the company is much smaller than its social media peers, which also sell advertising. Trump, Truth Social’s most popular user, currently has 6.7 million followers. Digital World said in its prospectus last month that the platform has received 8.9 million sign-ups since its launch in 2022.
Incidentally, Company X announced last year that the number of monthly active users exceeded 540 million. Meta’s new social network Threads announced in July that it had registered 100 million new users in five days.
Online analytics firm SimilarWeb estimates that Truth Social had 3.7 million desktop and mobile visitors in the U.S. in January, down 32% from a year ago. Reddit’s stock trades at a similar level to Trump Media, and it claims to have about 500 million monthly visitors.
Digital World said in its prospectus that Trump Media’s “adherence to traditional key performance indicators” (common industry measurements such as sign-ups and active users) could “divert focus” from business growth. He said he thought it was sexual.
Trump Media “believes that focusing on these KPIs may not be in the best interest of the public.” [Trump Media] or its shareholders,” the prospectus states.
Trump Media’s soaring value on paper is far higher than Trump’s own valuation in April 2023, after the merger process was delayed. In his campaign’s financial disclosure filing that month, Mr. Trump said his stake in the company was worth between $5 million and $25 million.
Truth Social is President Trump’s central online megaphone, and many of its contributors are Trump supporters who share conservative memes, align with his causes, and attack his political opponents. Trump Media is based in Sarasota, Fla., and has 51 to 200 employees, it said on LinkedIn.
Trump has not invested any money into the company, which was founded in early 2021 by Andy Litinski, a former contestant on Trump’s TV show “The Apprentice,” and Wes Moss. The men are currently suing Trump Media, accusing it of diluting their company’s stock.
Trump Media took over the DJT stock ticker symbol for Trump Hotels & Casino Resorts, President Trump’s last publicly traded company. The Post reported in 2016 that the company lost more than $1 billion during the Trump years and filed for bankruptcy in 2004.
According to the merger agreement, Mr. Trump’s six-month lock-up provision may be waived with the approval of the Trump Media board, which currently includes Mr. Nunes and Mr. Trump. Trump’s son, Donald Trump Jr., and several prominent Trump allies, including Robert E. Lighthizer, Linda McMahon and Kash. Patel said in an SEC filing.
But financial experts told the Washington Post that allowing Mr. Trump to raise money early could flood the market with money and push the company’s stock price lower.
In a post on Truth Social on Saturday, Chad Nedohin, one of Digital World’s investors, blamed Friday’s stock price drop on “massive market manipulation” and “fake news” reports about the lockup. said. Mr. Nedukhin also claimed that Mr. Trump would never sell his company’s stock because “such an action would be terrible for Mr. Trump and would destroy the value of his own company.”
But President Trump could use the money to pay off some of the hundreds of millions of dollars in legal fines. A New York Court of Appeals panel on Monday ordered Trump to post $175 million bail within 10 days to delay enforcement related to his $454 million civil fraud judgment, which includes possible asset seizure. He said he needed to bring it in.
President Trump used the occasion of his company’s public launch to compare his legal woes to the Christian commemoration of Holy Week, which ends with Easter Sunday. On Monday, President Trump posted a “beautiful” message he said he received from his supporters, writing, “It’s ironic that Jesus experienced his greatest persecution in the very week they were trying to steal your property.” said.
At 11 a.m. Tuesday, as Trump Media’s stock was nearing its midday high, Trump posted on Truth Social, “I love Truth Social, I love the truth!”
Trump’s critics say the stock’s performance highlights how investors and influence seekers can fund publicly traded companies majority-owned by former presidents and potential presidential candidates. He said there was.
A report released in January by Democrats on the House Oversight Committee found that Trump’s companies received at least $7.8 million from foreign governments and officials while he was president.
On a Reddit investment forum, one poster wrote that people betting on the company “don’t understand how many actors there are within the organization.” [U.S.] And people all over the world are interested in donating to DJT. ”
Noah Bookbinder, director of Citizens for Responsibility and Ethics in Washington, a progressive government watchdog group, said, “For years, Trump has sought influence from people who support his business.” “We’ve been very open about the fact that we’re open to receiving…and this appears to be the case.” It’s like an opportunity created specifically for that. ”
“There’s good reason to think he’ll look favorably on anyone who benefits him financially,” Bookbinder added.
Trump Media spokeswoman Shannon Devine said in a statement that the claims are “another set of outrageous conspiracy theories about Truth Social.”
Trump Media will face additional financial disclosure requirements as a public company, but major shareholders are not required to immediately disclose their investments.
[ad_2]
Source link
