Wall Street is now betting on Trump’s Truth Social stock to fail

09 April 2024

Former President Donald Trump's net worth is gradually evaporating as his Trump Media and Technology Group (TMTG) — the parent company of his Truth Social platform — continues its precipitous slide on Wall Street.

The Guardian reported that after two solid weeks of poor performance, the stock, which is trading as $DJT on the Nasdaq Composite, is now an attractive stock for investors known as "short sellers." Traders can make a quick buck from "shorting" a stock, which is essentially placing a bet on the market for the stock to continue to decline in value.

"As of Monday afternoon, DJT stock was priced at about $36 – down from a high of $66 seen on 27 March. But market analysts are saying it’s too soon to draw any firm conclusions from the depreciation because the stock has become one of the most actively shorted on the Nasdaq exchange," wrote Guardian reporter Edward Helmore.

$DJT started trading at nearly $70 per share after its initial public offering (IPO) was announced in late March. It was trading at $37.17 per share when markets closed on Monday. And financial publication Barron's reported Tuesday morning that TMTG is continuing to decline in value, trading at just $36.74 when markets opened. With its most recent performance, $DJT has now erased all previous gains made since it went public by merging with Digital World Acquisition Group — a special purpose acquisition group (SPAC) — in late March.

Trump's social media company lost the confidence of investors after a regulatory filing with the Securities and Exchange Commission showed it had net losses in 2023 of roughly $58 million, far outpacing its paltry revenue of $4.1 million last year. That filing also showed that TMTG needed the funding of the SPAC it merged with in order to remain operational.

Truth Social CEO Devin Nunes — a former Republican member of Congress — has tried to assuage investors' concerns by saying the company has "no debt and over $200 million in the bank, opening numerous possibilities for expanding and enhancing our platform."

"We intend to take full advantage of these opportunities to make Truth Social the quintessential free-speech platform for the American people," Nunes stated.

However, experienced institutional investors aren't convinced. Billionaire Expedia Group chairman Barry Diller panned the stock last week in an interview with CNBC, saying it was a "meme stock" akin to worthless stocks that got an artificial bump from social media, like Gamestop and AMC Theaters in 2021. He dismissed TMTG's IPO as "stupid stuff" and said the people buying it were "dopes."

"I mean, it's ridiculous. The company has no revenue," Diller said. "It’s a scam, just like everything he’s ever been involved in is some sort of con."

The former president hasn't had much success with IPOs despite his assertions of being savvy in business. His last public company, Trump Hotels and Casino Resorts, experienced a similar trajectory in the 1990s. While it once traded as high as $35 per share in 1996 after launching an IPO of $14 per share, it became a worthless penny stock in less than a decade.

The value of Trump's 78 million shares in TMTG has already plummeted by more than $2 billion, after previously being worth roughly $5 billion. Under the merger agreement, he won't be able to liquidate his stake until September.

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