NEW YORK, USA — Former US President Donald Trump’s social media company, Trump Media & Technology Group, TMTG, is facing a steep decline in its market value, wiping out a significant portion of Trump’s personal wealth.
Shares of the company, which owns Truth Social, have fallen by nearly 72% since reaching a peak in March, raising concerns about the enterprise’s long-term viability.
Despite a brief rebound of 7% on Monday, September 16, 2024, the company’s stock is trading at its lowest level since its merger earlier this year.
Trump’s dominant stake of 114.75 million shares, once valued at $6.2 billion in May, is now worth just $2.1 billion.
This sharp decline has knocked Trump off the Bloomberg Billionaires Index, a list of the world’s 500 wealthiest people.
Market Reality
The dramatic selloff reflects concerns raised by analysts and experts about the financial fundamentals of TMTG.
The company, which has struggled to generate substantial revenue, brought in only $837,000 last quarter.
Despite the media hype surrounding Truth Social, it remains a minor player in the competitive social media landscape.
“If this wasn’t Trump, this thing would be trading at $1,” said Matthew Tuttle, CEO of Tuttle Capital Management, in a phone interview with CNN.
Billionaire investors Barry Diller and Reid Hoffman, both Democratic megadonors, have been openly critical of the stock’s valuation.
Diller called Trump Media investors “dopes” in April, and Hoffman described the company’s valuation as “absurdly out of the realm of normal” in June.
Political Uncertainty
One key factor driving TMTG’s downturn is political uncertainty. Since President Joe Biden endorsed Vice President Kamala Harris in July for the 2024 presidential race, the stock has lost half its value.
Tuttle believes the company’s future hinges largely on Trump’s success in the election.
“This stock is entirely a Trump-gets-elected play,” Tuttle said. “If Trump wins, this could be a viable company. But if he loses, I don’t know how this is a going concern.”
The political nature of Trump Media’s success has made it a risky investment.
While retail investors and Trump supporters may continue to back the stock, financial experts warn that separating politics from profits is essential.
“If you’re holding onto this for dear life because you’re a Trump fan, that’s just stupid. You invest to make money,” Tuttle added.
Future Prospects
Despite its stock market struggles, Trump Media still holds over $300 million in cash and equivalents, giving it financial power to pursue acquisitions and support its operations.
The company recently launched Truth+, a TV streaming platform that targets conservative audiences, in an effort to diversify its offerings.
However, another challenge looms for the company.
The lock-up period preventing Trump and other insiders from selling shares is set to expire on September 20, 2024.
This could free up insiders to offload their shares, potentially flooding the market and driving prices even lower.
Experts suggest that it would be difficult for Trump to sell a large portion of his shares without crashing the stock entirely.
