Donald Trump’s social media venture has experienced a dramatic reversal of fortune on the stock market. Shares in Trump Media & Technology Group (TMTG), the parent company of Truth Social, closed below $17 on Wednesday, effectively wiping out all gains since the company’s meteoric rise began in January. The former US president, who holds a majority stake in the firm, has seen the paper value of his investment plummet from $4.9 billion in March to approximately $2 billion. This sharp decline comes at a particularly inopportune moment for Trump, who faces potential penalties in the hundreds of millions of dollars following two civil trials.
TMTG’s business fundamentals paint a sobering picture. The company reported meagre sales of just $4.13 million in 2023, coupled with a substantial loss of $58.2 million. Truth Social’s user base also lags significantly behind its competitors, with an estimated 7.7 million visits in March compared to X’s (formerly Twitter) 6.1 billion. The company’s brief stint as a ‘meme stock’ drove its valuation to nearly $10 billion in March, a figure that appears increasingly disconnected from its underlying performance. This phenomenon echoes the volatile trajectories of other meme stocks like GameStop and AMC Entertainment, where rapid rallies often precede steep declines.
Trump’s recent return to X, following a lengthy absence, has raised questions about his commitment to Truth Social. However, TMTG has previously insisted there is no “conceivable sign anywhere” that Trump intends to sell his shares, which are subject to a lock-up agreement until late September. As the dust settles on this market rollercoaster, investors and analysts alike will be closely watching TMTG’s next moves. The company’s ability to translate Trump’s political profile into a sustainable business model remains to be seen, especially as it navigates the highly competitive landscape of social media platforms.
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