On Tuesday, shares of Donald Trump’s Trump Media & Technology Group (TMTG) soared by as much as 59% on Tuesday, buoyed by fervent support from the former U.S. president’s followers pushing his net worth by $633 million.
Trump who recently joined the top 500 richest people in the world is now worth $7.16 billion. This rise offers Trump the prospect of a significant windfall at a time when he faces mounting legal expenses from various ongoing cases.
At its peak during the trading session, TMTG’s market capitalization exceeded $10 billion on an undiluted basis, marking a valuation for a company that reported an operating loss of $10.6 million for the first nine months of 2023, with revenue totalling just $3.4 million.
Despite the initial euphoria, TMTG’s stock eventually closed 16% higher at $57.99, still representing a substantial valuation of nearly $8 billion.
- Trump’s majority stake in TMTG had previously been valued at approximately $6 billion, although lock-up restrictions for the next six months could impede his ability to sell or leverage his shareholding for financial purposes.
- The journey to TMTG’s stock market debut began with its merger with Digital World Acquisition Corp, a blank-check company, which was announced in 2021 but faced obstacles and delays along the way.
Nevertheless, both Digital World and the newly listed TMTG have witnessed a meteoric rise of nearly 600% since the merger announcement, solidifying TMTG’s status as one of Wall Street’s notable “meme stocks.” These stocks, popular among retail traders, often experience volatile movements influenced by social media chatter.
What you should know about billionaire Trump’s social media company
The process to list Trump Media commenced with the announcement in 2021 and materialized through a Special Purpose Acquisition Company (SPAC) merger with Digital World Acquisition Corp, designed explicitly for acquiring and taking companies public. Despite facing regulatory scrutiny and other obstacles, the deal obtained clearance earlier this year, with Digital World shareholders endorsing it last week.
Described as a pivotal juncture for the company and the broader media landscape, Trump Media’s executives underscored their commitment to challenging Big Tech censorship and upholding free expression. CEO Devin Nunes, a former congressman, emphasized the company’s dedication to fostering a platform for unrestricted dialogue.
The timing of Trump Media’s debut coincides with a critical period for Mr. Trump, who faces financial strain stemming from legal penalties. With over half of the company’s shares under his ownership, Trump’s inability to liquidate his holdings for at least six months poses liquidity challenges.
The composition of the company’s board, which includes Trump allies, including one of his sons, suggests a reluctance to modify these restrictions promptly. Any significant divestment by Trump could potentially impact the share price adversely.
Investors also confront uncertainties tied to Trump’s political endeavours, notably his prospective 2024 presidential campaign, which could influence the company’s fortunes. Amidst these complexities, Trump Media navigates a landscape fraught with regulatory, financial, and political risks, shaping its trajectory in the volatile media industry.
