'Orangeman has the Midas touch?': Internet stunned as Trump Media's stock surges despite financial realities

PALM BEACH, FLORIDA: In a whirlwind of trading activity, Trump Media & Technology Group, the parent company of former president Donald Trump’s Truth Social platform, saw its stock defy expectations in its inaugural week on the stock market.

Despite a less-than-stellar financial performance in 2023, the company's stock closed at an impressive $62 per share on Thursday, March 28, marking a significant increase from the $49.99 per share price the day before its market debut.

The merger between Trump Media and Digital World Acquisition Corp. (DWAC), a "blank check" company, paved the way for the stock market debut. This merger, hailed as a major victory for the former president and his media venture, led to a market capitalization of approximately $8.4 billion for Trump Media by the end of its first week, according to CNBC data.

However, financial experts caution that the enthusiasm surrounding Trump Media's stock may not be entirely grounded in its financial fundamentals.

Meme stock phenomenon

With the company's revenue totaling just $3.4 million and posting a net loss of $49 million in the first nine months of 2023, some experts categorize it as a "meme stock," driven primarily by investor sentiment rather than traditional financial metrics.

Thomas Hayes, chairman and managing member of Great Hill Capital, emphasized that Trump Media's market performance is more a reflection of support for Donald Trump himself rather than the company's intrinsic value.

“This is a proxy on support for Donald Trump and nothing more, period,” Hayes told The Hill, before adding, “I’ve never seen anything like it. But then again, you could say the same thing about Donald Trump.”

Jay Ritter, a finance professor at the University of Florida, estimates that the true value of Trump Media stock is around $2 per share, significantly lower than its market price.

“With its transition into a public company, Truth Social aims to robustly expand and enhance the platform, while vehemently defending the free speech rights of our users. We are leading an entire movement to reassert free expression in the digital space,” stated Shannon Devine, a Truth Social spokesperson. 

Meanwhile, Trump campaign spokesperson Steven Cheung told The Hill that Truth Social “is hot as a pistol” and “the only place, aside from speeches and interviews, where the American people can get President Trump’s message directly from him.”

The fervent support for Trump among his base has been likened to a "quasi-religious fervor" by Steve Sosnick, chief strategist at Interactive Brokers. “You need a large group to have a belief in the company that goes beyond just normal investment criteria,” Sosnick said.

This fervor, reminiscent of the meme stock phenomenon that emerged in 2021 with GameStop, transcends traditional investment criteria, with investors driven more by faith and allegiance than financial analysis.

Trump's significant ownership stake in Trump Media, totaling roughly 58 percent, positions him to potentially reap billions of dollars from the company's success. However, a lockup provision currently prevents him from selling his shares for six months, delaying his access to the funds.

Despite this, Hayes predicts that Trump, within six months, will "have access to billions of dollars that he can pour into advertising, pour into the campaign, pour into his legal fees” as he prepares for a potential rematch with President Biden in November.

This comes as Trump's fundraising efforts have faced challenges, trailing behind Biden's in the early months of 2024. Biden's campaign significantly outpaced Trump's, raising $42 million in January alone, while Trump's main committees only managed to bring in $13.8 million.

Trump's fundraising efforts in February showed some improvement, but he still lagged behind Biden, who raised $53 million during the same period.

Social media reactions

Amid the buzz surrounding Trump Media's stock performance, social media platforms were ablaze with reactions.

"Orangeman has the Midas touch?" one posted on X.

"Sounds like there needs to be an investigation," another wrote.

"Defied expectations? Whose expectations? Everything I saw said the MAGA people would push the price up to back their hero," someone else added.

"It’s a bulls**t enterprise that will go bankrupt, just like everything else Trump has ever touched," another insisted.

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