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Trump's Truth Social Loses Billions in Valuation as Stock Price Goes Down

Trump's Truth Social Loses Billions in Valuation as Stock Price Goes Down

Former President Donald Trump's fledgling media business, Trump Media & Technology Group, has experienced a tumultuous ride on the stock market since its recent debut.

The company, which operates the social media platform Truth Social, has seen its stock price plummet, wiping $4 billion off its value in just one week. Let's delve into the details of this rollercoaster journey. On March 25, Trump Media & Technology Group made its public debut on the Nasdaq Composite Index under the ticker symbol "DJT" (after the former president's initials).

Shares initially opened at $49.90 per share, but the excitement was short-lived. Within days, the stock price swung wildly, reaching a high of $79.38 on March 26 before plummeting to its current level of $48.66. The company's regulatory filing revealed mounting losses, prompting its accountant to issue a warning that these losses "raise substantial doubt about its ability to continue as a going concern."

In other words, Trump Media & Technology Group faces significant financial challenges¹. Despite this, the stock remains higher than its pre-public offering levels, having surged 178% since the beginning of the year. As the majority shareholder with a 57% stake in the company, Donald Trump himself has not been immune to the stock's volatility.

At its peak, his stake was valued at $6.3 billion, but the recent slide has eroded $2.5 billion of that wealth, leaving it at $3.8 billion.

Still, this valuation places Trump Media & Technology Group ahead of companies like Bausch & Lomb, Alcoa Corp., and Harley-Davidson, despite its relatively modest revenue figures. Analysts have drawn parallels between Trump Media's soaring valuation and the phenomenon of "meme stocks."

These stocks, fueled by social media buzz rather than traditional financial metrics, have captured the attention of individual investors.

While GameStop was the iconic meme stock, Trump Media's trajectory has outshone it, according to Michael Pachter of Wedbush Securities¹. In 2023, Trump Media & Technology Group reported $4.1 million in revenue, a significant increase from the previous year's $1.5 million.

However, the company also posted a loss of $58 million in 2023, compared to a profit of $50 million in the prior year. These figures underscore the company's ambitious yet precarious position in the market. As Trump Media & Technology Group grapples with its stock's wild swings, investors and observers alike remain captivated by this unconventional journey.

Whether it can weather the storm and establish itself as a lasting player in the social media landscape remains to be seen. One thing is certain: the DJT stock has become a headline-grabbing saga, and its twists and turns continue to intrigue the financial world.