Topline
Shares of Donald Trump’s social media company skyrocketed in their first two days on the stock market, adding billions to the former president’s fortune despite a potentially dubious valuation.
Donald Trump's social media company began trading on the Nasdaq stock exchange Tuesday under the ... [+]
Key Facts
Trump Media (ticker $DJT) shares were up about 42% from their inception through early Wednesday, the firm’s second day of trading as an independent public company following the completion of its reverse merger with the previously public, special-purpose acquisition company Digital World Acquisition Corp.
Trading at about $71 per share after a Wednesday rally, Trump Media’s market capitalization sits at roughly $8 billion, pending the redemption of stock purchase agreements by existing Digital World shareholders.
Trump, who owns 78.9 million shares in Trump Media, about 60% of all of its stock, now has an approximately $5.6 billion nest egg from Trump Media, whose primary offering is the right-wing social media platform Truth Social.
Trump can’t sell his shares in his namesake company for six months, a period which will test whether the “meme stock” can maintain its multibillion-dollar valuation on the public market despite far from robust financial results.
Shares of Trump Media rallied as much as 60% early Tuesday before settling into a more modest 16% gain for their debut, though the stock’s liftoff continued Wednesday, with shares rising a further 19%.
Surprising Fact
Trump Media’s $8 billion market cap is higher than several companies listed on the S&P 500, including CBS parent Paramount Global and toy giant Hasbro. That’s despite Trump Media’s $4.6 million revenue over the last 12 months coming in at less than 0.1% of the $5 billion brought in by Paramount and Hasbro over their respective last four quarters.
Key Background
There’s little technical backing to suggest Trump Media is worthy of its current valuation, considering it has about 1% the monthly active users of social media competitor Reddit and about 0.4% the annual revenue of Reddit, which has a market cap of about $11 billion. Instead, Trump Media traders appear to be backing Trump as his legal fees and challenges mount ahead of November’s presidential election, with some experts deeming Trump Media a meme stock. Digital World and Trump Media announced their intent to combine in October 2021 amid the reverse merger frenzy, and Truth Social debuted in early 2022 as Trump served a since-lifted suspension from mainstream social media sites like Facebook.
Forbes Valuation
Trump was worth about $6.4 billion at the end of Tuesday trading, according to our estimates, with a majority of his wealth coming from his stake in Trump Media. That’s a far cry from his social media business’ Tuesday paper value, but reflects the price paid in February by institutional investors before its public debut.
Further Reading
