- Written by Natalie Sherman
- Business Correspondent, New York
Image source, Getty Images
Shares of Donald Trump's media company rose as the company made its official stock market debut.
Shares rose above $70 in early trading, giving the company a market value of more than $9 billion. They ended the day at around $58, still up more than 16%.
The long-awaited moment will pump more than $200 million into Trump's media and technology group and give the former president a stake worth more than $4 billion.
Analysts say this is much more than the company's performance warrants.
Trump Media's Truth Social, a Twitter-like service, generated just $3.3 million in revenue in the first nine months of last year and lost nearly $50 million.
It says 8.9 million accounts have been created since the platform was launched to the general public in 2022 as an alternative to major sites like Facebook, but it is not clear how many accounts are active.
In comparison, the recently listed Reddit currently has a market value of about $11 billion. It has more than 70 million users and generated $800 million in revenue last year.
Christy Marvin, CEO of SPACInsider, compared Trump Media — which trades under the ticker DJT for Trump's initials — to meme stocks, in which prices are unencumbered by the business's prospects.
Interest in Trump's media has also been boosted by individual investors, as opposed to Wall Street firms, many of whom are apparently Trump supporters.
“Everyone expected trading to be a little crazy today, which is what happened,” she said. “The real question is how it will trade a week from now, or two weeks from now and no one really knows.”
The Trump Media listing deal was first announced in 2021.
The move was accomplished through what is known as a SPAC, a merger with a publicly traded shell company, Digital World Acquisition Corp, which was created specifically to buy a company and take it public.
The deal was delayed due to government investigations and other hurdles, but regulators cleared it earlier this year and Digital World shareholders voted in favor last week.
Ahead of the Nasdaq listing, Trump officials described it to the media as a “pivotal moment” for the company — and the broader media landscape.
“As a public company, we will passionately pursue our vision of building a movement to reclaim the Internet from Big Tech censorship,” said Trump Media CEO Devin Nunes, a former congressman.
“We will continue to fulfill our commitment to Americans to serve as a safe haven for free expression and to stand up to the ever-growing army of oppressors of expression.”
The debut comes at a critical moment for Mr. Trump, who has been scrambling for money to pay legal penalties and owns more than half of the company's shares.
He is currently banned from selling his properties for at least six months, making it difficult for him to take advantage of the windfall immediately.
The company's board, full of allies, including one of his sons, is likely to change that rule, but analysts said they believe it is unlikely to happen immediately.
If Trump sells a significant portion of his shares, it could hurt the stock price.
Investors face other risks as well, tied to Mr. Trump's political fortunes and his 2024 presidential campaign.
A loss is expected to hurt the stock price, but a win could have the opposite effect, especially if it leads to more demand from buyers hoping to curry favor with Trump, said Michael Olrogg, a law professor at New York University.
However, Professor Olrogg said the current share price was “well above what anyone would consider its fundamental value”.
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