For the first time in almost 30 years, part of Donald Trump’s business empire has gone public. It’s off to a strong start.
Trump Media & Technology Group, the owner of struggling social media platform Truth Social, is began its long-delayed journey as a public company at Tuesday’s opening bell under the ticker symbol “DJT.” The stock surged about 50% at the market open.
Wall Street is assigning Trump Media an eye-popping valuation of around $14 billion — a price tag that experts warn is untethered to reality.
Shares of Digital World Acquisition Corp., the shell company that became Trump Media Tuesday morning, have spiked nearly 200% so far this year. That includes a 35% surge Monday after the deal closed. Shares popped again at the start of trading Tuesday – investors’ first opportunity to trade the stock after the merger, under the new DJT ticker.
The skyrocketing share price comes despite the fact that Trump Media is burning through cash, piling up losses and its main product, Truth Social, is losing users.
“This is a very unusual situation. The stock is pretty much divorced from fundamentals,” said Jay Ritter, a finance professor at the University of Florida’s Warrington College of Business, who has been studying initial public offerings (IPOs) for over 40 years.
Ritter said the closest parallel would be GameStop, AMC and other so-called meme stocks that skyrocketed during Covid-19 as an army of retail traders piled in. He said Trump Media is likely worth somewhere around $2 a share — nowhere near its implied stock price of $50.
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Article URL : https://www.cnn.com/2024/03/26/markets/trump-media-stock-truth-social/index.html