Get ready for the big debut of a brand-new social media ticker: DJT.
Donald Trump's social media platform, which he started after being kicked off major platforms following the Jan. 6, 2021 Capitol riot, is about to start trading on the Nasdaq stock exchange. This platform, called Truth Social, is under Trump's company, Trump Media & Technology Group, which will replace Digital World Acquisition after merging with Digital World, a company already listed on Nasdaq.
The stock of Digital World Acquisition Corp. jumped 35% in regular trading Monday, closing at $49.95, erasing losses from Friday when investors approved the merger. Truth Social's parent company will start trading with a market value of about $5.5 billion, making Trump's stake worth about $3 billion.
Despite the high valuation, Truth Social has faced losses since its launch in 2021. For comparison, social media firm Reddit is valued at about $8 billion, with more than $800 million in sales last year. In contrast, Truth Social generated $3.3 million in revenue during the first nine months of 2023.
University of Florida professor Jay Ritter noted that Truth Social's stock price seems disconnected from its actual value, likening it to the surges seen in stocks like AMC and GameStop. He estimated the stock's actual value at around $2 a share and predicted continued volatility as Trump supporters trade shares.
Truth Social is a small player in the social media world, with about 494,000 U.S. mobile app users and 648,000 web visitors in February, both down from the previous year. The platform's success depends on growing its user base, especially considering risks such as Trump's "death, incarceration, or incapacity," and his past business bankruptcies.
The surge in Digital World shares has significantly increased the value of Trump's stake in Trump Media. Trump, who owns 79 million shares, has been given a 10-day extension to post a $175 million bond as he appeals a civil fraud judgment against him.
The deal with Digital World gives Trump Media access to over $300 million raised from investors in a 2021 IPO and a private financing deal. Digital World is a special purpose acquisition company (SPAC), which raises money to merge with a private company and take it public, offering an alternative to traditional IPOs.
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