Trump media debuts on Nasdaq

Trump Media, based in Palm Beach, Florida, said that it is highly dependent on the popularity and presence of President Trump. If the former president were to limit or discontinue his relationship with the company for any reason the company would be significantly disadvantaged

New York: As Donald Trump’s social media company begins trading publicly on Tuesday, would-be investors might ask themselves if the stock is too pricey and potentially too volatile. Trump Media & Technology Group Corp was acquired on Monday by a blank-check company called Digital World Acquisition Corp. Trump Media, which runs the social media platform Truth Social, now takes Digital World’s place on the Nasdaq stock exchange. Trump Media debuts with a stock price near $50 and a market value of about $6.8 billion.

Many of Digital World’s investors were small-time investors either trying to support Trump or aiming to cash in on the mania, instead of big institutional and professional investors. Those shareholders helped the stock more than double this year in anticipation of the merger going through. They’re betting on a company that has yet to turn a profit. Trump Media lost $49 million in the first nine months of last year, when it brought in just $3.4 million in revenue and had to pay $37.7 million in interest expenses.

In a recent regulatory filing, the company cited the high rate of failure for new social media platforms, as well as the company’s expectation that it will lose money on its operations “for the foreseeable future” as risks for investors. Truth Social launched in February 2022, one year after Trump was banned from major social platforms including Facebook and X, formerly Twitter, following the January 6 insurrection at the US Capitol. He’s since been reinstated to both but has stuck with Truth Social.

On Monday, Trump appeared in court in New York at hearing for a criminal case involving hush money payments made to cover up claims of marital infidelity. Afterwards, Trump told reporters that “Truth Social is doing very well. It’s hot as a pistol and doing great.” However, Trump Media has yet to disclose Truth Social’s user numbers — although that should change now that the company is public.

Research firm Similarweb estimates that Truth Social had roughly 5 million active mobile and web users in February. That’s far below TikTok’s more than 2 billion and Facebook’s 3 billion — but still higher than other “alt-tech” rivals like Parler, which has been offline for nearly a year but is planning a comeback, or Gettr, which had less than 2 million visitors in February.

Besides competition in the social media field, Trump Media faces other risks — including to some degree Trump, who will have a nearly 60 per cent ownership stake in the company.