'Trump and dump': How ex-president’s Truth Social 'meme stock' could cover his massive legal bills

28 March 2024

On Tuesday, March 26, the Wall Street Journal reported that stock in Trump Media & Technology Group — the parent company of Donald Trump's social media platform Truth Social — "surged 16 percent" on its "first day of trading."

Now that Trump Media & Technology Group (which merged with the company Digital World Acquisition for the deal) is being publicly traded, Donald Trump is getting a windfall from his shares. But critics of the 2024 GOP presidential nominee have been arguing that Trump Media & Technology Group stock is fools gold that will not perform well in the long run — regardless of how well it is doing at the moment.

In an article published on March 28, The New Republic's Timothy Noah floats a wild scenario: Trump selling his Trump Media & Technology Group shares in order to cover his massive legal expenses.

"Jay Ritter, a finance professor at the University of Florida, told CNN that if the company's stock reflected its actual value, it would be priced not at $70 but at $2," Noah explains. "The large mismatch between stock price and stock value will sorely tempt the cash-poor Trump to sell off a significant portion of his shares, in a potential maneuver that I believe I am the first to label 'Trump and dump.'"

Noah argues that Trump Media & Technology Group shares are what brokers call a "meme stock." Essentially, a "meme stock" is one that might look hot at the moment but in the long run, doesn't perform well.

"How worthless an investment is Truth Social?" Noah writes. "Looking at what killjoys call 'the fundamentals,' the platform's monthly active users fell 51 percent in February compared to the previous year, down to a very modest 494,000. Facebook, Twitter, and even Threads all have monthly active users in excess of 100 million…. It's curious that Trump's MAGA cult wants to invest in Truth Social but not to join Truth Social."

Noah adds, "After all, buying Truth Social will set you back 70 bucks a share."

Trump's financial woes range from all the money he owes his attorneys to the hundreds of millions in sanctions, fines or damages he has been ordered to pay in various civil lawsuits — which include writer E. Jean Carroll's two civil defamation cases and New York State Attorney General Letitia James' civil fraud case.

"Trump’s $4 billion stake in Truth Social constitutes more than half of all shares," Noah writes. "He is barred for six months from selling any of that stake, unless he receives permission from the company's board. Rather naively, I assumed this would be difficult, because so big a sell-off might look to regulators an awful lot like an illegal 'pump and dump' scheme wherein some boiler-room sleazeball talks up the value of a stock to investors and then dumps his shares, making a killing while his clients lose their shirts. The Truth Social board would also likely worry that letting Trump smash the piggy bank would endanger the value of their own investment in the company, and invite a lot of outraged shareholder lawsuits."

Noah continues, "I figured all this, however, without considering the composition of Truth Social’s board, which turns out to consist of seven members, three of them former Trump Administration officials: former U.S. Trade Representative Robert Lighthizer, former White House aide Kash Patel, and former Small Business Administration Chief Linda McMahon."

Timothy Noah's full article for The New Republic is available at this link.

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