Shares of Trump Media and Technology Group, which trades under the stock ticker DJT (not surprisingly), soared following the completion of its SPAC merger last week. A SPAC (special acquisition purpose company) is a shell company (in this case, Digital World Acquisition) that goes public with the intention of later acquiring a real company. For a while, TMTG's market cap was in the $9 billion range, making it more valuable than Etsy or Hasbro. This increased the former president's net worth to $7 billion, but it was not in a form he could immediately tap into. President Trump cannot sell his company stock for six months unless the board orders otherwise.
But if I were Trump, I would try to instigate the board of directors to speed up that lockup period so I could profit from it. It seems unlikely, so to speak, that his media company's stock price will remain this high forever.
First, TMTG, which owns the conservative Twitter copycat site Truth Social, makes essentially nothing. Total revenue for the first nine months of 2023 was $3.4 million. Extrapolating this, the stock is probably trading at around 2,000 times the company's annual earnings. I mean, umm, it's expensive. For example, Apple trades at about 7 times total sales. And considering TMTG's meager revenue, he actually lost $49 million over the same period.
Trump's company says it has even bigger plans going forward, including growing Truth Social and developing “one or more additional cutting-edge products and/or services” to complement Truth. This includes “certain video streaming situations that provide people with a 'home'.” Canceled content creator. ” It's unclear what exactly this will look like or how many people will gather.
Truth Social had an estimated 5 million monthly visits to its website in February, according to third-party trackers, but the company did not provide exact metrics at this time. By comparison, Facebook had 845 million monthly active users when it went public in 2012, and Twitter had 215 million when it went public the following year. The short answer is that TMTG is not a thriving business.
However, other social media designed to appeal to the widest possible audience may not be an appropriate comparison. Truth Social and other businesses launched by Trump Media and Technology Group are almost certain to appeal only to Trump fans.
President Trump's media company is not the first conservative organization to go public through a SPAC in recent years, attempting to make money from right-leaning consumers and investors. Its predecessor was less successful. Rumble, the Peter Thiel-backed right-wing YouTube platform, rose about 40% on its first day of trading in September 2022, but has remained well below that since then. Black Rifle Coffee, the Starbucks for Republicans, and Public Square, the party envisioned as an alternative to Amazon, have both followed similar trajectories. In other words, the stock price rose sharply early on, and has since remained below $10. Neither has achieved sustainable profitability, but Black Rifle says it is on its way.
I think Mr. Trump has a much better chance of winning the White House (or ending up with a conviction) than for his mediocre social media company to take off.
Being in the anti-woke business is not particularly lucrative. People want to shop and invest their values, but that's often not the case. Instead, most people choose convenient options or things they are already familiar with. There's a reason most boycotts don't work. People are busy and tired. The same goes for the left side. If you dig deep enough, any company in the world could probably give you a reason why they don't want to give you money.
Wouldn't Mr. Trump and Truth Social be different, at least in terms of stock prices? I mean, I think anything is possible. As my colleague Peter Kafka points out, investors have not yet shorted stocks en masse. That's partly because it's difficult to short, and partly because we see DJT gaining popularity with the meme stock crowd. When GameStop and AMC achieved meme status, small investors were eager to get on board with them, even though they weren't doing particularly well from a business perspective. For a sizable portion of this country, throwing cash at Trump's company is a way to funnel money not just to The Man, but to The Wake Man as well. Mr. Trump has also spent years claiming that his literal name is worth a lot of money, and we're about to find out just how much.
Still, I suspect Trump has a much better chance of winning the White House (or ending up with a conviction) than his mediocre social media company ever taking off. He might want to call someone on TMTG's board, such as his son Don Jr., and ask if they would like to have a book meeting so he can start selling his stock sooner.
emily stewart As a senior correspondent for Business Insider, he writes about business and economics.
