Shares of Trump Truth Social valued at  at the close of Wall Street’s first day of trading
Shares of Trump Truth Social valued at  at the close of Wall Street’s first day of trading

The parent company of Donald Trump’s Truth Social platform began trading on Wall Street on Tuesday, with its shares trading under the ticker symbol ‘DJT’ at $78.

They fluctuated throughout the day before stabilizing around $70 and ending at $57.99 when the Nasdaq closing bell rang.

The day’s trading meant Mr Trump entered the ranks of the world’s 500 richest people, with his majority stake in the company now worth $5.5bn (£4.3bn), increasing his net worth to over $8 billion.

Shareholders in Mr Trump’s social network voted on Friday to take the company public, a move that could end up netting the former president tens of millions of dollars as he desperately tries to find money for court judgments against him .

Mr. Trump will have to find money from his own coffers or get help from a surety company to post an appeal bond by Monday that would block a $454 million fine after a New York judge found that he defrauded banks and insurers.

His lawyers were able to convince a state appeals court to grant him a 10-day extension of the bail deadline and lower the expected amount to $175 million. Lawyers argued that finding the full amount had proved a “practical impossibility”, with around 30 bond companies refusing to take his valuable real estate empire as collateral.

Political action committees supporting the presumptive GOP nominee to face President Joe Biden in November are also pouring in tens of millions of dollars to pay his court bills and attorney fees, months before a summer of criminal trials and a general election.

The public debut of Truth Social’s parent company, Trump Media & Technology Group, appears to have proved a huge boost to the former president’s financial fortunes, but he won’t see an immediate return.

On Friday, after delays caused by investigations by regulators and the US Department of Justice, Truth Social shareholders approved the long-awaited merger between Trump Media and publicly traded shell company Digital World Acquisition Corporation.

Under the terms of the settlement, major shareholders of Trump Media cannot sell their shares for six months. That stipulation — often used to prevent newly public entities from signaling internal collapse or a lack of faith in the company’s future — applies to the former president.

Mr. Trump has a 60 percent stake in the company, which was the de facto platform of his presidential campaign, raking in millions of dollars worth of free media coverage every time he fired off an inflammatory post.

Wall Street valued Trump Media at about $14 billion, but experts say that figure is deeply flawed. Digital World Acquisition Corporation, which on Tuesday became Trump Media after the merger, has seen its stock price jump nearly 200 percent so far this year.

The rising stock price and high valuation come even as Trump Media loses money and even as Truth Social loses users.

“This is a very unusual situation,” Jay Ritter, a finance professor at the University of Florida, told CNN. “Equities are quite detached from fundamentals.”

Mr. Ritter added that the closest comparison would be so-called meme stocks like GameStop and AMC, which have soared during the pandemic amid pressure from retailers. He said Trump Media was probably worth about $2 a share, but shortly after 10 a.m. Tuesday it was trading at about $68.

“The core business doesn’t seem to be worth much. There is no evidence that this is going to become a large, highly profitable company,” Mr. Ritter told CNN.

“I’m relatively confident that the stock price will eventually fall to $2 a share, and may even fall below that if the company blows the cash it got from the merger.”

In the first nine months of last year, Trump Media generated $3.4 million in revenue but lost $49 million.

In its initial public offering last week, Reddit was valued at $6.4 billion, although it earned $804 million last year, compared to $5 million for Trump Media.

Matthew Kennedy, senior IPO strategist at Renaissance Capital, told CNN that “at these levels, it appears untethered to its core business results.”

“At the end of the day, valuations tend to go back to fundamentals,” he added. “That means these stocks are definitely at risk of crashing back down.”

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