Yes, the company went public. No, it is not a financial success—or even a lifeboat.
Debuting on the charts w/a “DJT” ticker, #TrumpMedia saw a 55% surge in valuation right after markets opened.
Huge influx of cash, right? w/Trump holding ~79M shares, equating to 58% of available stock, the #SPAC debut balloons his #NetWorth by nearly $5B; there were ~136M shares outstanding post-merger.
What a turnaround, right after the lamestream media kept claiming #Trump was in the tank! Another genius business move from the Donald, right in time for him to cover his somewhat discounted #legal bills!
Except … not really, bc a lot of what powered the 1st-day boom is not tenable in the longer term—much like TruthSocial’s business itself.
To put it simply: The success of #TrumpMedia’s #IPO has less to do w/its viability as an enterprise & more to do w/the fandom surrounding that famous name.
Before going public, the co was far from profitable: TruthSocial itself only garnered $3.38M in total revenue over the 1st 3 quarters of 2023—& lost $49M over that same period, w/ >½ of that loss occurring in Q3. Per Axios:“The company’s cash-on-hand dwindled to just $1.8M at the end of Sept…while its total liabilities climbed ~72% to $60.5M.” (#DWAC pre-merger fed filings noted “mgmt has substantial doubt that [#TrumpMedia] will have sufficient funds to meet its liabilities as they fall due.”)
Considering TruthSocial remains a free platform that’s financially dependent on ads…to buy, uh, collectible gold coins of #Trump’s mugshot & pillows manufactured by a broke #ElectionDenier, there’s no real financial lifeline on the horizon. +there are no incentives for more lucrative advertisers, seeing as the 2-yr-old #platform only commands ~5M active users, lost 39% of its active user base over the past yr, & has persistently seen reduced traffic & download numbers from its peak….
…those pitiful earnings represent a steep drop from the hundreds of millions that #DWAC had raised from investors, some of whom yanked out their commitments before the merger. Bloomberg reported Mon that some initial DWAC #investors were so bearish that they redeemed their shares before the merger was approved, taking a 75% loss on those #investments. In other words: The company is a #financial mess.
You may be wondering just whence that staggering #valuation arises,then. There are a couple factors at play—namely, rich friends & retail-level suckers.
…As a #ShellCompany established w/the express purpose of gathering #investments & absorbing them into the minimally operational #TrumpMedia, #DWAC curried investments from all manner of private institutions,most significantly #SIG… meaning #JeffYass, the #Republican#megadonor who’s been floated as potential #treasury sec if #Trump is reelected.
#JeffYass’s firm holds a 2% stake in #DWAC &, considering its other assets, can afford some hits as long as #Yass gets to own the libs.
On #TrumpMedia’s end, its current board of directors is hardly lacking in wealth, or loyalty: The CEO is fmr Rep #DevinNunes, & his teammates include #DonaldTrumpJr + fmr #Trump admin members #KashPatel, #RobertLighthizer, & Linda McMahon (as in, yes, the wife of embattled wrestling magnate Vince McMahon).
All these lackeys running the show means a lot of (feigned) confidence from folks in charge. + the most eager #shareholders aren’t in this for high returns, but to support their king…in their own words…in the #DWAC “groups” on #TruthSocial: “I’m holding & plan on being part of the greatest #SocialNetwork there is & support fmr & future President #Trump” (the anthem of the aforementioned retail-level #suckers.) This all means that $DJT is basically…the #political equivalent of a #MemeStock.
…none of this is going to help a cash-broke #Trump now or anytime soon. Per terms of the merger, Trump is forbidden from selling shares for ≥6 months; he could request a waiver from the board, which would no doubt bless any desire of his. But if he were to gain that waiver & try to sell his shares now? Well, those retail investors are planning to hold on to their shares until the #election. They’re literally banking on a Trump reelection to push the #stock through the roof so they can get rich…
…that’ll only work if #Trump has confidence in his #platform & doesn’t dump a bunch of #stock, or even give a hint he’s thinking of doing such a thing (like by requesting a waiver), which would scare smaller-scale #investors, piss off #JeffYass, & send #TrumpMedia’s valuation plummeting.
…Does Trump have that kind of confidence in his platform?…he still needs money, fast, & not just because he might not have enough liquid cash to even cover the reduced $175M #bond he needs to pay off by April 4.
…both #TrumpMedia & #DWAC are facing 3 lawsuits, incl’g 1 from 2 #TruthSocial co-founders & fmr Apprentice contestants who allege #Trump purposefully stiffed them on a company stake. That #litigation isn’t going to die down in the midst of a #MemeStock craze.
By the end of Tues, the stock had dropped from its 55% surge down to 16% up from pre-market levels…it hasn’t returned anywhere near close to that peak…. people will keep on trading $DJT. It just isn’t going to help Trump anytime soon.
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