Trump Media and Technology Group (TMTG) is on fire in the United States. Donald Trump’s media company got off to a flying start on Tuesday on the New York Stock Exchange for its first day of trading under the initials DJT, those of the future Republican candidate for the November presidential election.
Shares of TMTG, which oversees the social network Truth Social, climbed 16.10% to $57.99, a closing price however much lower than the level reached during the session with at times an increase of more than 50%. .
Trump main shareholder of TMTG
“I love Truth Social, I love the truth,” Donald Trump said on Tuesday on his network, created in 2022, hailing the success of the shares on the Nasdaq. Shortly after the opening of Wall Street, the trading of the highly demanded DJT title even had to be suspended for a few minutes before resuming.
On Friday, a general meeting of the front company – also called SPAC – Digital World Acquisition Corp (DWAC), a listed vehicle intended to carry another company, voted in favor of a merger with TMTG. Donald Trump is the main shareholder of TMTG who will control several tens of millions of shares in the new listed company.
According to several estimates, the former president’s stake would be valued on paper at around $4.5 billion, given the price of the stock. Several analysts, however, question the solidity of this valuation. Trump Media only generated $3.4 million in revenue during the first nine months of 2023, according to information collected by CNN, while its losses amounted to $49 million. By comparison, the social network Reddit, which has also just listed on Wall Street, reached a valuation of more than $9 billion on Tuesday while its turnover represents more than $800 million.
A title driven by political motivations
Steve Sosnick, chief strategist for Interactive Brokers (IBKR) believes that this enthusiasm among stock markets for these new stocks resembles the movement that affected “meme stocks”, these viral stocks which arouse speculation among stock marketers. According to him, “in the case of DJT, political motivations drive the title”. “It is not absurd to think that a large number of followers” of Donald Trump’s MAGA (Make America Great Again) movement “vote for their favorite candidate with their wallets.”
On paper in any case, this IPO offers a breath of financial oxygen to Donald Trump, whose financial health is precarious and who is being pursued by the courts on several fronts. However, through the agreement between TMTG and DWAC, a lock-up period of six months remains during which existing shareholders cannot sell their shares on the market.