Trump’s Truth Social surges in DJT stock debut, but questions remain

Former president Donald Trump’s social media start-up surged Tuesday in its first day of trading as a public company, a stock-market debut that helped deliver the Republican presidential candidate a multibillion-dollar paper fortune.

Trump Media & Technology Group, which owns the social network Truth Social, saw its share price close up 16 percent, though that was down from a high of 50 percent hours into its first day on the Nasdaq exchange under its new ticker symbol, DJT — Trump’s initials.

Trump Media took over the stock held by a special purpose acquisition company, Digital World Acquisition, as part of a merger deal first launched in 2021 and approved by shareholders last week.

Trump owns 60 percent of Trump Media, or roughly 78 million shares, a stake now worth more than $4.6 billion.

The company’s valuation, however, stands at odds with its business performance. Trump Media earned about $3.4 million in revenue and lost $49 million in the first nine months of 2023, a Securities and Exchange Commission filing shows.

The Trump company’s shares ended Tuesday at $58, only a few dollars below the stock price of the discussion-board platform Reddit, which went public last week. Last year, Reddit generated more than $800 million in revenue.

The trading frenzy has helped make Trump Media one of the largest contributors to Trump’s net worth, according to Bloomberg, which on Monday said Trump had for the first time joined its list of the world’s 500 richest people.

Trump, however, can’t sell his shares or use them as collateral for six months due to a common business-deal provision, known as a lockup, designed to give investors confidence that major shareholders won’t quickly cash out once a deal closes.

When Trump Media and Digital World announced their plans to merge in 2021, Digital World’s share price skyrocketed too, to a high of $175 a share. But the stock plunged in the days afterward and faced years of low prices and volatility due in part to merger delays. Its shares were selling for about $17 at the start of this year.

Roughly 400,000 retail investors bought shares in Digital World, but the official changeover to Trump Media has seemingly motivated a new class of investor. On Reddit’s prominent “WallStreetBets” subreddit, many posters have called for pouring money into the “meme stock” for short-term gains: “LETS GO TO THE MOON!!” one post said.

On Monday, Trump Media chief executive Devin Nunes, a former Republican congressman from California, said in a statement that the company will work “to reclaim the Internet from Big Tech censors” and “stand up to the ever-growing army of speech suppressors.”

The merger unlocked for Trump Media more than $300 million that Digital World raised from investors in 2021 and which the company has said it intends to use toward expanding the online infrastructure supporting its main source of revenue, ads on Truth Social.

The company, however, is far smaller than its social media peers, which also sell ads. Truth Social’s most popular user, Trump, currently has 6.7 million followers. Digital World said in a prospectus last month that the platform had received 8.9 million sign-ups since launching in 2022.

For comparison, X said last year it had more than 540 million monthly active users. Meta’s new social network, Threads, said in July it had signed up 100 million new users in five days.

Truth Social had 3.7 million desktop and mobile visits in the U.S. in January, down 32 percent from a year ago, according to estimates from the online-analytics firm SimilarWeb. Reddit, whose stock is trading at similar levels as Trump Media, says it has roughly 500 million visitors a month.

In the prospectus, Digital World said Trump Media believed that “adhering to traditional key performance indicators” — common measurements for the industry, like sign-ups and active users — could “divert its focus” from the growth of its business.

Trump Media “believes that focusing on these KPIs might not align with the best interests of [Trump Media] or its shareholders,” the prospectus said.

Trump Media’s soaring value on paper is far higher than Trump’s own assessment of it in April 2023, when the merger process was delayed. In a campaign financial disclosure filing that month, Trump said his stake in the company was worth between $5 million and $25 million.

Truth Social is Trump’s central online megaphone, and many of its posters are Trump supporters who share conservative memes, echo his talking points and attack his political opponents. Trump Media is based in Sarasota, Fla., and says on LinkedIn it has between 51 and 200 employees.

Trump has invested no money in the company, which was launched in early 2021 by Andy Litinsky and Wes Moss, two former contestants on Trump’s television show “The Apprentice.” The men are now suing Trump Media, claiming the company had worked to dilute their shares.

Trump Media assumed the DJT stock ticker symbol of Trump’s last publicly traded company, Trump Hotels & Casino Resorts. That company lost more than $1 billion during Trump’s time as chairman and filed for bankruptcy in 2004, The Post reported in 2016.

The merger agreement says Trump’s six-month lockup provision could be waived with approval from Trump Media’s board, whose directors now include Nunes, Trump’s son Donald Trump Jr. and several high-profile Trump allies, including Robert E. Lighthizer, Linda McMahon and Kash Patel, an SEC filing shows.

But allowing Trump to cash out early could flood the market and erode the company’s share price, financial experts told The Washington Post.

In a Truth Social post Saturday, one Digital World investor, Chad Nedohin, said a stock drop Friday was the fault of “MASSIVE market manipulation” and “fake news” reporting about the lockup. Nedohin also insisted Trump would never sell his shares, because “such a move would be TERRIBLE for Trump and would destroy the value in his own company.”

Trump, however, could use the money to pay toward some of his hundreds of millions of dollars in legal penalties. A New York appeals court panel said Monday that Trump would need to post a $175 million bond within 10 days to delay enforcement related to his $454 million civil fraud judgment, including the potential seizures of his assets.

Trump has used the occasion of the public launch of his company to draw a comparison between his legal difficulties and the Christian commemoration of Holy Week, which ends Sunday with the celebration of Easter. On Monday, Trump posted a “beautiful” message he said he received from a supporter, which said, “It’s ironic that Jesus walked through His greatest persecution the very week they are trying to steal your property from you.”

At 11 a.m. Tuesday, when Trump Media’s shares were near their midday peak, Trump posted on Truth Social, “I LOVE TRUTH SOCIAL, I LOVE THE TRUTH!”

Trump critics said the stock’s performance highlights how investors and influence-seekers could now give money to a public company mostly owned by a former president and presumptive presidential nominee.

A report released in January by Democrats on the House Oversight Committee found that Trump’s businesses had received at least $7.8 million from foreign governments and officials during his presidency.

On the Reddit investing forum, one poster wrote that anyone betting against the company “doesn’t understand how many actors in the [U.S.] and around the world have an interest in giving money to DJT.”

Noah Bookbinder, the chief of Citizens for Responsibility and Ethics in Washington, a progressive government watchdog group, said “Trump for years has been very open about the fact that he is receptive to being influenced by anyone who will support his businesses … and this seems like an opportunity that is tailor-made for that.”

“We have every reason to think he is going to look favorably on anyone who benefits him financially,” Bookbinder added.

Shannon Devine, a Trump Media spokeswoman, said in a statement that the claim was a “new set of inane conspiracy theories about Truth Social.”

Though Trump Media will face more financial-disclosure requirements as a public company, major shareholders will not have to immediately disclose their investments publicly.