In a stunning turn of events, Donald Trump’s business empire witnessed a historic moment as part of it went public after almost three decades. Trump Media & Technology Group, the parent company of the struggling social media platform Truth Social, debuted on the stock market under the ticker symbol “DJT.” The initial trading frenzy saw shares skyrocket, but the excitement waned by the closing bell, leaving experts questioning the valuation’s connection to reality.
The opening bell saw Trump Media’s stock surge by a remarkable 56%, reaching $78, prompting a brief halt in trading due to volatility. However, the euphoria quickly subsided, with shares stabilizing around $70 before settling at $57.99 by the end of the day, marking a more modest 16% increase. Despite the late-day slide, Wall Street bestowed an astonishing valuation of nearly $11 billion upon Trump Media, a figure experts consider divorced from the company’s actual worth.
Financial analysts likened the situation to the phenomenon of meme stocks like GameStop and AMC, where stock prices soared beyond rational valuation as retail traders flooded the market. Jay Ritter, a finance professor at the University of Florida, emphasized that Trump Media’s true value likely hovered around $2 per share, a stark contrast to its closing price of $58.
Trump’s significant stake in the company, comprising 79 million shares, translates to a substantial windfall. At the opening price of nearly $78, his stake soared to nearly $6 billion, although lock-up restrictions may prevent immediate selling or leveraging of these shares. By the closing bell, the value of Trump’s stake settled at $4.6 billion.
Despite generating a meager $3.4 million in revenue during the first nine months of the preceding year, with a staggering $49 million loss over the same period, Trump Media is being valued at approximately $11 billion. To put this in perspective, Reddit, a vastly more successful platform, was valued at $6.4 billion during its recent IPO, despite generating significantly higher revenue.
Matthew Kennedy, a senior IPO strategist at Renaissance Capital, highlighted the precariousness of Trump Media’s valuation, emphasizing the eventual return to fundamental business metrics. The vast disparity between valuation and business performance indicates a looming risk of the stock plummeting back to realistic levels.
In conclusion, Donald Trump’s net worth experienced a meteoric rise following the public debut of Trump Media & Technology Group, fueled by an inflated stock valuation detached from the company’s underlying financial health. While the initial excitement may have bolstered Trump’s wealth on paper, the sustainability of this valuation remains uncertain as market forces inevitably reconcile with reality.