The Trump Media and Technology Group (TMTG) is on fire in the United States. Donald Trump’s media company began trading on its first day on the New York Stock Exchange on Tuesday under DJT, the initials of the future Republican candidate for the November presidential election.
Shares of TMTG, which oversees social network Truth Social, rose 16.10% to $57.99, a closing price that was well below levels reached during the session and rose more than 50% at times.
Trump major shareholder of TMTG
“I love the truth social, I love the truth,” Donald Trump said Tuesday on his network created in 2022, hailing the success of shares on the Nasdaq. Shortly after the opening on Wall Street, trading in the highly sought-after DJT title had to be suspended briefly before resuming.
On Friday, the general meeting of the front company – also called SPAC – Digital World Acquisition Corp (DWAC), a listed vehicle intended to take over another company, voted in favor of the merger with TMTG. Donald Trump is TMTG’s major shareholder who will control millions of shares in the newly listed company.
According to some estimates, the former president’s stake would be worth about $4.5 billion on paper, given the stock price. However, some analysts question the validity of this assessment. According to data collected by CNN, Trump Media generated just $3.4 million in revenue during the first nine months of 2023, while its loss was $49 million. By comparison, social network Reddit, which also just listed on Wall Street, reached a valuation of more than $9 billion on Tuesday while its turnover represents more than $800 million.
A title driven by political motivations
Steve Sosnick, chief strategist at Interactive Brokers (IBKR), believes the enthusiasm in stock markets for these new stocks is similar to the movement that affected “meme stocks,” the viral stocks that fuel speculation among stock marketers. According to him, “in DJT’s case, political motivations drive the title”. It’s not absurd to think that “massive followers” of Donald Trump’s MAGA (Make America Great Again) movement vote their favorite candidate with their wallets.
In any case, on paper, this IPO gives financial oxygen to Donald Trump, whose financial health is precarious and who is being pursued by the courts on several fronts. However, by agreement between TMTG and DWAC, there remains a six-month lock-up period during which existing shareholders cannot sell their shares in the market.
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