NEW YORK (AP) — The value of Donald Trump's social media company grew by more than 30% on the first day of trading on the Nasdaq, boosting the worth of Trump's large ownership in the company and the smaller investments of supporters who bought shares to show their backing for the former president.
Trump Media & Technology Group Corp. merged Monday with a blank-check company called Digital World Acquisition Corp. y named Digital World Acquisition Corp. Trump Media, which operates the social media platform Truth Social, has now replaced Digital World on the Nasdaq stock exchange.
Before trading began, Trump Media had a market value of approximately $6.8 billion, a figure that will increase significantly if the gains in the shares hold. The shares are available under the ticker symbol “DJT.” Trump has nearly a 60% ownership stake in the company. As of 12:00 p.m. ET, the shares were up 34% to $67.
The stock garnered so much interest that Nasdaq briefly paused its trading just two minutes after it started for the day.
Many of Trump Media's investors are small-scale investors aiming to show their support for Trump or hoping to profit from the excitement, as opposed to large institutional and professional investors. These shareholders contributed to Digital World's stock more than doubling this year in anticipation of the merger.
Truth Social debuted in February 2022, one year after Trump was barred from major social platforms like Facebook and X, previously known as Twitter, following the Jan. 6 uprising at the U.S. Capitol. He has since been reinstated on both platforms but has chosen to stick with Truth Social.
On Truth Social Tuesday, #DJT and the Digital World ticker were among the top trending topics in posts. Truth Social users were posting about their shareholder status or seeking advice on purchasing shares.
One user encouraged conservatives to “invest in the DJT stock and push it above $100 per share” to “upset the liberals!” Another stated: “Get yourself a piece of #DJT stock if you're a true MAGA supporter.”
A day earlier, Trump Media CEO Devin Nunes, a former House Republican, stated, “As a public company, we will ardently pursue our vision to create a movement to reclaim the Internet from Big Tech censors.”
Despite the excitement, investors may encounter a volatile journey. Firstly, they are betting on a company with uncertain prospects of generating profit. Trump Media incurred a $49 million loss in the first nine months of last year, with just $3.4 million in revenue and $37.7 million in interest expenses.
In a recent regulatory filing, the company highlighted the high rate of failure for new social media platforms, as well as the company's anticipation of continuing to operate at a loss “for the foreseeable future” as risks for investors.
Research firm Similarweb estimates that Truth Social had around 5 million active mobile and web users in February. This figure is far below TikTok's more than 2 billion and Facebook's 3 billion, but still higher than other “alt-tech” rivals like Parler.
However, Trump Media has indicated that it does not track some of the metrics that competitors use as important indicators of their performance, such as average revenue per user or active user accounts. The company has expressed its preference for long-term focus over “short-term decision-making.”
Skeptics worry about the future of a company that is estimated to have far fewer users than its rivals, which is crucial for success in this business.
Jay Ritter, a professor at the University of Florida’s Warrington College of Business and an expert on initial public offerings of stock, believes there is a chance that the stock price could drop by 95% at some point.
Trump would definitely disagree with that assessment. He said on Monday that Truth Social is doing very well, and on Tuesday he expressed his love for the platform.
Up to now, investors’ bet on the former president and Truth Social have paid off. However, the company has acknowledged that there are risks associated with Trump’s outsized influence.
According to a regulatory filing by Trump Media, the company is highly dependent on the popularity and presence of President Trump. If he were to limit or discontinue his relationship with the company, it would be significantly disadvantaged, especially due to his campaign to regain the presidency.
Acknowledging Trump’s involvement in numerous legal proceedings, the company noted that “an adverse outcome in one or more” of the cases could negatively affect Trump Media and Truth Social.
Another risk, the company said, was that as a controlling stockholder, Trump would be entitled to vote his shares in his own interest, which may not always be in the interests of all the shareholders generally.
