Donald Trump’s fledgling social media platform Truth Social is set to go public Tuesday, beginning trading on the Nasdaq stock exchange under the ticker symbol DJT – the former president’s initials.
It’s the culmination of a steady road to the public markets for Trump Media & Technology Group, Truth Social’s parent company. Through a merger with Digital World Acquisition Corp., a special purpose acquisition company (SPAC), Trump’s media venture is entering its next phase with a market valuation of around $5.5 billion.
The lofty figure dwarfs Truth Social’s underwhelming business performance so far. The X-like platform that bills itself as a free speech alternative generated just $3.3 million in revenue over the first nine months of 2023, while racking up tens of millions in losses since its launch in 2021.
But fundamentals have taken a backseat to the speculative frenzy around Trump’s media ambitions and his legions of devout supporters eager to buy a piece of the action. According to USA TODAY, Digital World’s shares surged 35% on Monday ahead of the Truth Social merger, closing at $49.95 to give Trump’s roughly 79 million shares a paper valuation topping $3 billion.
“This is a stock where the market price is divorced from fundamental value,” said Jay Ritter, a University of Florida finance professor. He estimates Truth Social’s actual worth at around $2 per share based on finances, citing past examples like GameStop and AMC where online traders famously disregarded traditional metrics.
Still, meme stock mania alone can’t explain the astronomical valuation being attached to the twice-impeached former president’s foray into social media. Trump supporters view backing his media play as equal parts financial investment and political statement after his exile from mainstream platforms like X and Facebook in the wake of the January 6 Capitol riots.
Trump and some of his staunchest allies, including his son Donald Trump Jr., will take top roles at the newly public Trump Media & Technology Group. But the deal also provides over $300 million in fresh funding from SPAC investors to build out Truth Social’s bare-bones offerings and potentially acquire other media properties.
Growing Truth Social’s relatively minuscule 1.1 million total user base will be very important, as the company cautions Trump’s “death, incarceration or incapacity” as a key risk factor given its reliance on his polarizing persona and former influencer platform.
The merger comes amid an expensive legal quagmire for Trump. Tapping into his newly inflated Truth Social holdings could provide a financial lifeline to cover mounting court costs and judgments like New York’s $454 million civil fraud penalty. But converting his stake into cash or collateral will require approval from Truth Social’s newly installed seven-member board.
Public trading could also shine unwanted light on the company’s internal machinations. Federal investigations are already probing whether Trump’s team had improper communications with Digital World before the SPAC deal taking shape – allegations both parties deny.
