Trump Media and Technology Group, the company that handles the former president's Truth Social platform, went public this month, after a long-sought merger that creates billions in market cap. But already, the newly created stock is proving to be volatile.
According to USA TODAY, "Donald Trump’s namesake social media company burst out of the gate on its first day of trading Tuesday, opening at $70.90 and soaring as high as $79.38 as Trump fans and opportunistic traders bought up shares. But the price faded late in the session and has bounced along at lower levels ever since, ending Thursday down $4.26 at $61.96. Its market valuation, just over $8 billion, is still stunning for a social media fledgling with an unproven business model that has struggled to attract users and advertisers, burned through cash and wracked up losses."
All of this has come as many of the founding figures at Trump's company are in active civil war, with a flurry of lawsuits surrounding the merger that made it all possible.
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"Thursday’s slide into the red could be just the beginning, market observers say," the report continued, with University of Florida professor Jay Ritter expecting the stock could slide all the way to $2 a share. “The stock will continue to be very volatile, with sharp moves up and down. But the long-term trend will be down,” he continued. “The company has about $2 in cash per share, but it will probably burn through that money and the most likely outcome is eventual bankruptcy.”
"Trump Media’s trading has mimicked meme stocks like GameStop and AMC Entertainment, which rose to improbable heights in 2021 after individual investors organized on social media platform Reddit to drive up the stock price. Those investors aimed to strike back against hedge funds that had bet against the company and shorted the stock," the report noted. "What’s tricky is predicting when a meme stock will collapse, said Derek Horstmeyer, a finance professor at George Mason University in Virginia, who specializes in corporate finance. The only hard-and-fast rule? 'Eventually, it does,' Horstmeyer said."
Some commentators speculated that even if it does collapse, the short-term value created as much as $4 billion in wealth for the former president. However, others have noted it's not so simple for him to use that wealth to dig his way out of his expensive legal judgments and other serious problems.