Trump’s Truth Social Surges in Stock Market Debut

truth social stock price
Trump’s Truth Social media platform made an impressive debut on the stock market, with its stock price soaring over 45% by early Tuesday afternoon.

The parent company of Truth Social, Trump Media & Technology Group, went public on Tuesday morning under the ticker symbol DJT, representing Donald J. Trump. By 1:15 p.m. ET, the stock was trading at $72.93, up nearly $23 from its initial offering.

This public listing became possible through Trump Media’s merger with Digital World Acquisition, a special purpose acquisition company (SPAC). Shareholders of Digital World voted in favor of the merger on Friday, paving the way for Trump Media to take its place on the Nasdaq on Tuesday.

What is the value of Truth Social?

Before trading began on Tuesday, the parent company of Truth Social had a market value of approximately $6.8 billion. With Trump holding around 79 million of the total 135 million outstanding shares, his stake in the company was valued at about $4 billion.

This valuation might seem steep for a company that has accumulated only tens of millions of dollars since its launch in 2021 and generated just over $3 million in revenue during the first nine months of 2023.

For comparison, Reddit, a social media platform that earned over $800 million in revenue in 2023, was valued at roughly $6.4 billion during its initial public offering (IPO) the previous week. Its stock was trading at $70.90 as of 1:16 p.m. ET.

While the parity in valuation between Truth Social and Reddit may seem improbable, Trump’s social media venture has been buoyed by investments from dedicated Trump supporters, according to Derek Horstmeyer, a finance professor at George Mason University in Virginia. He remarked, “It’s difficult to justify this valuation using conventional metrics.”

What is Trump’s net worth?

The public listing of Truth Social represents a substantial boost to Trump’s net worth, at least on paper. However, Trump is prohibited from selling his shares or using them as collateral for six months without approval from the Trump Media board.

Trump has been directed to post a $175 million bond as he appeals a $454 million civil fraud judgment against him. Additionally, he has been ordered to pay $83.3 million following a defamation trial loss to advice columnist E. Jean Carroll.

Why is Truth Social’s ticker symbol DJT?
Research suggests that familiar names, such as the initials of a former president, can positively impact a company’s stock performance. Studies conducted by Princeton University psychologists in 2006 and Pomona College in 2019 found that stocks with easily pronounceable or clever tickers tend to perform better, likely because they are more memorable to investors.

What is Digital World Acquisition?
Digital World is a SPAC, also known as a blank check company. These publicly traded shell companies are designed to acquire or merge with private companies and facilitate their transition to public status.

The merger between Truth Social and Digital World was announced in 2021 amid a surge in companies opting to go public through SPACs. However, SPACs have faced criticism for potentially disadvantaging retail investors.

Why did Trump launch Truth Social?
Truth Social was established after Trump was banned from major social media platforms following the January 6, 2021 attack on the Capitol.

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