After nearly three decades, a segment of Donald Trump’s business empire is poised to go public. Trump Media & Technology Group, the owner of the struggling Truth Social platform, is embarking on its delayed journey as a public company with the ticker symbol “DJT” at Tuesday’s opening bell.

Despite Wall Street assigning Trump Media a staggering valuation of approximately $9 billion, experts caution that this valuation appears disconnected from reality. Shares of Digital World Acquisition Corp., the shell company transitioning into Trump Media, have surged nearly 200% this year, including a 35% jump on Monday following the deal’s closure, with an additional 8% increase in premarket trading Tuesday.

This sharp rise in share price occurs amid concerns about Trump Media’s financial health, with losses mounting and its flagship product, Truth Social, experiencing user attrition. Finance professor Jay Ritter from the University of Florida’s Warrington College of Business, drawing parallels to meme stocks like GameStop and AMC, suggests that Trump Media’s true value may hover around $2 per share, far below its current implied stock price of $50.

Ritter underscores doubts about Truth Social’s potential for significant profitability, stating, “The underlying business doesn’t seem to be worth much. If the company exhausts its merger funds.

The remarkable valuation represents a substantial windfall for Trump, who possesses a commanding stake of 79 million shares. At Monday’s closing price of nearly $50 per share, Trump’s stake approaches $4 billion in value. However, lock-up restrictions likely constrain Trump from selling or leveraging these shares in the near future.

Despite Trump Media’s modest revenue of $3.4 million during the first nine months of the previous year, coupled with a staggering loss of $49 million over the same period, the market values the company at roughly $9 billion. To put this in perspective, Reddit, which went public last week, was valued at $6.4 billion, despite generating revenue 160 times higher than Trump Media. (Reddit amassed $804 million in revenue in 2023, while Trump Media’s annualized revenue is approximately $5 million.)

Matthew Kennedy, senior IPO strategist at Renaissance Capital, remarks, “At these levels, it appears untethered to its underlying business results. Truth Social, despite its association with Trump, confronts significant obstacles and remains substantially smaller than its competitors. In February, it reported just 494,000 monthly active users in the US across iOS and Android platforms, a fraction of the user base of platforms like Twitter (formerly known as X) with 75 million users, and Facebook with 142 million users.

Moreover, Trump’s own history of bankruptcies adds another layer of uncertainty. His last publicly traded company, Trump Hotels and Casino Resorts, which also used the DJT ticker symbol, filed for bankruptcy in 2004 and was delisted from the New York Stock Exchange. Trump Media acknowledged Trump’s bankruptcy history as a risk factor in its SEC filing.

There’s also speculation about the future when lock-up restrictions on Trump and other insiders expire in the coming months. Trump’s ongoing legal troubles might prompt him to sell his significant stake, potentially impacting Trump Media’s share price.

Investing in a potential Trump victory in November is not the only consideration. Other insiders, including the special purpose acquisition company (SPAC) sponsor, would also gain the opportunity to sell their shares.

Similar to any social media enterprise, Truth Social confronts the imperative to augment its user base, enhance its advertising operations, and establish a subscription service. However, these objectives are complicated by the divisive political climate, where a significant segment of the population regards the Trump movement with skepticism.

Matthew Kennedy emphasizes that Trump Media’s public debut essentially constitutes a “multi-billion dollar bet” on the prospect of a second Trump administration. Such an outcome could prove exceedingly lucrative for his social media platform.


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