Shares of Donald Trump's social media company surged by over 30% on the first day of trading on the Nasdaq, increasing the value of Trump's significant ownership in the company as well as the smaller stakes of supporters who bought shares to show their backing for the former president.
Trump Media & Technology Group Corp. combined Monday with a blank-check company known as Digital World Acquisition Corp. Also known as the social media platform Truth Social, Trump Media has now taken the place of Digital World on the Nasdaq stock exchange. Before trading started, Trump Media had a market value of about $6.8 billion, a number that will increase significantly if the share gains hold.The shares trade under the symbol “DJT.” Trump owns almost 60% of the company.
As of 12:00 p.m. ET, the shares had risen by 34% to $67. The stock caused such a frenzy that Nasdaq briefly paused its trading just two minutes after it started for the day.Many of Trump Media's investors are small-time investors who either want to show support for Trump or aim to capitalize on the excitement, rather than large institutional and professional investors.
The stock gained so much attention that Nasdaq briefly halted its trading just two minutes after it started for the day.
Many of Trump Media’s investors are small investors either trying to support Trump or looking to profit from the excitement, rather than big institutional and professional investors.
Truth Social debuted in February 2022, a year after Trump was banned from major social platforms like Facebook and Twitter, following the Jan. 6 insurrection at the U.S. Capitol. He has since been reinstated to both but has chosen to use Truth Social instead.
On Truth Social Tuesday, #DJT and Digital World's ticker were two of the top trending topics. Users were discussing being shareholders or seeking advice on how to buy shares.
One user encouraged conservatives to support the DJT stock and push it over $100 per share to frustrate 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, said, “As a public company, we will passionately pursue our vision to build a movement to reclaim the Internet from Big Tech censors.”
Despite the excitement, investors might face a turbulent journey. They are investing in a company with uncertain prospects of becoming profitable. Trump Media incurred a $49 million loss in the first nine months of last year, with only $3.4 million in revenue and $37.7 million in interest expenses.
In a recent regulatory filing, the company highlighted the high failure rate for new social media platforms, as well as the company's anticipation of ongoing losses as risks for investors.
Research firm Similarweb estimates that Truth Social had around 5 million active mobile and web users in February, which is much lower than TikTok's more than 2 billion and Facebook's 3 billion, but still higher than other alternative technology competitors like Parler.
However, Trump Media has stated that it does not track certain metrics that rivals use as important indicators of their performance, such as average revenue per user or active user accounts. It aims to focus on long-term goals rather than short-term decision-making.
Some people doubt that the company will do well in the long term, because it is estimated to have fewer users than its competitors.
A professor at the University of Florida's Warrington College of Business, Jay Ritter, thinks it's possible that the stock price could drop by 95% at some point.
President Trump certainly disagrees with that assessment. He said on Monday that Truth Social is doing very well and on Tuesday, he expressed his love for the platform.
Investors' bet on the former president and Truth Social have been successful so far. However, the company has acknowledged the risks associated with Trump’s significant influence.
Trump Media, located in Palm Beach, Florida, stated in a regulatory filing that its success is heavily dependent on the popularity and presence of President Trump. If Trump were to limit or discontinue his connection with the company, it would be at a significant disadvantage.
Acknowledging Trump’s involvement in several legal proceedings involving Trump in various legal cases, the company mentioned that an unfavorable outcome in one or more of the cases could harm Trump Media and Truth Social.
Another risk identified by the company is that as a major stockholder, Trump would be entitled to vote his shares in his own interest, which might not always align with the interests of all the shareholders.
