Trump Truth Social shares worth $58 as first trading day on Wall Street closes

‘This stock is definitely at risk of plummeting back down to earth,’ IPO strategist says

The parent company of Donald Trump’s Truth Social platform started trading on Wall Street on Tuesday, with its shares appearing under the ticker “DJT” and priced at $78.

Their value fluctuated throughout the day before stabilising at around $70 and finishing on $57.99 as the Nasdaq’s closing bell sounded.

The day’s trading meant Mr Trump has entered the ranks of the world’s 500 richest people, with his majority stake in the company now worth $5.5bn (£4.3bn), taking his estimated net worth to more than $8bn.

Shareholders in Mr Trump’s social network voted on Friday to take the company public, a move that could ultimately earn the former president tens of millions of dollars as he desperately tries to find cash for the court-ordered judgements against him.

Mr Trump will need to find money from his own coffers or get help from a surety company to post an appeals bond by Monday that would block enforcement of a $454m penalty after a New York judge found that he defrauded banks and insurers.

His attorneys have succeeded in convincing a state appeals court to grant him a 10-day extension on his bond deadline and reducing the amount expected to $175m. The lawyers argued that finding the full amount had proven a “practical impossibility”, with rejections from roughly 30 bond companies that wouldn’t take his prized real estate empire as collateral.

Political action committees supporting the Republican Party’s likely nominee to face President Joe Biden in November are also haemorrhaging tens of millions of dollars to pay his legal bills and attorneys’ fees, months before a summer of criminal proceedings and the general election.

The public debut of Truth Social’s parent company, Trump Media & Technology Group, appears to have proven a massive boost to the former president’s financial state, but he won’t see any immediate return.

On Friday, after delays cause by investigations from regulators and the US Department of Justice, Truth Social shareholders approved a long-anticipated merger between Trump Media and the publicly traded shell company Digital World Acquisition Corporation.

Under the terms of the agreement, major shareholders of Trump Media cannot sell their shares for six months. That stipulation – commonly used to prevent newly public entities from signalling internal collapse or a lack of faith in the company’s future – applies to the former president.

Mr Trump has a 60 per cent stake in the company, which has been his presidential campaign’s de facto platform, reaping millions of dollars worth of free media coverage every time he fires off an incendiary post.

Wall Street has valued Trump Media at about $14bn, but experts say that number is deeply flawed. Digital World Acquisition Corporation, which became Trump Media on Tuesday following the merger, saw its share price spike almost 200 per cent so far this year.

The rising share price and the high valuation come even as Trump Media is losing money and despite Truth Social losing users.

“This is a very unusual situation,” Jay Ritter, a finance professor at the University of Florida, told CNN. “The stock is pretty much divorced from fundamentals.”

Mr Ritter added that the closest comparison would be so-called meme stocks such as GameStop and AMC, which rose during the pandemic amid a push from retail traders. He said Trump Media is likely worth about $2 a share – but just after 10am on Tuesday it was trading at about $68.

“The underlying business doesn’t seem to be worth much. There is no evidence this is going to become a large, highly profitable company,” Mr Ritter told CNN.

“I’m reasonably confident the stock price will eventually drop to $2 a share and could even go below that if the company blows through the money it got from the merger.”

In the first nine months of last year, Trump Media generated $3.4m in revenue but it lost $49m.

At its initial public offering last week, Reddit was valued at $6.4bn despite bringing in $804m last year compared to $5m for Trump Media.

Matthew Kennedy, a senior IPO strategist at Renaissance Capital, told CNN that “at these levels, it appears untethered to its underlying business results”.

“Eventually, valuations tend to fall back on fundamentals,” he added. “That means this stock is definitely at risk of plummeting back down to earth.”