Shares of former President Donald Trump’s social media and technology company jumped about 50 percent on Tuesday in its first day of trading on the Nasdaq before it was briefly halted for volatility.
It’s not uncommon for the trading of highly-watched stocks to be suspended when the price increases or plunges too quickly.
Reports indicated that more than 6.5 million shares of the Trump stock were bought and sold by around 9:50 a.m. ET. And a report from Reuters found that the company is now worth about $10 billion after the surge on the Nasdaq.
At over $70 on Monday, the company’s market capitalization was $9.84 billion on an undiluted basis. The former president’s majority stake in TMTG was last valued at $5.72 billion, although lock-up restrictions for six months could prevent him from selling or borrowing against his shareholding.
As of 3 p.m. ET on Tuesday, DJT was up about 38 percentage points.
TMTG, which owns social media platform Truth Social, officially merged with blank-check company Digital World Acquisition Corp. on Monday after a shareholder vote was held last Friday. After the vote, shares dropped almost 14 percent, but Monday they rebounded strongly with a gain of 35 percent—a day before it was traded on Nasdaq.
Devin Nunes, the CEO of the new company, said in a news release Monday that the business will move to “reclaim the Internet from Big Tech censors,“ adding: “We will continue to fulfill our commitment to Americans to serve as a safe harbor for free expression and to stand up to the ever-growing army of speech suppressors.” Mr. Nunes is a former Republican California congressman who left office to head the Truth Social social media platform that President Trump near-exclusively uses.
He added that “as we transition into a public company, we look forward to greatly enhancing and expanding Truth Social,” according to the press release.
In response to the developments this week, President Trump said Monday at his building on Wall Street in Manhattan that Truth Social is “doing very well” and its stock is “hot as a pistol.”
Risks?
Trump Media, based in Palm Beach, Florida, said in a recent regulatory filing that it “is highly dependent on the popularity and presence of President Trump.”If the former president were to limit or discontinue his relationship with the company for any reason, including due to his campaign to regain the presidency, the company “would be significantly disadvantaged.”
Acknowledging the former president’s involvement in numerous legal proceedings, the company noted that “an adverse outcome in one or more” of the cases could negatively affect Trump Media and Truth Social. Another risk, the company said, was that as a controlling stockholder, President Trump would be entitled to vote his shares in his own interest, which may not always be in the interests of all the shareholders generally.
If recent trading activity is any indication, investors should expect the shares to be volatile. Digital World shares more than doubled this year ahead of a shareholder vote on the merger with Trump Media.
Some analysts have noted that the stock is currently performing well possibly because of its proximity to President Trump. “The valuation of the business is rich relative to its underlying fundamentals, but I would not get in front of it in the near term,” Thomas Hayes, Chairman of Great Hill Capital, told Reuters. “This valuation may be more of a proxy on the enthusiasm of supporters for Trump than a reasonable estimate of underlying business prospects.”
The Truth Social developments come as a New York court on Monday slashed the appeal bond amount of his $454 million civil fraud judgment to $175 million if he can pay it within 10 days.
Monday’s ruling came from a five-judge panel in the state’s intermediate appeals court, called the Appellate Division, where President Trump is fighting to overturn Judge Arthur Engoron’s Feb. 16 civil fraud decision. Trump attorneys Alina Habba and Christopher Kise characterized Monday’s ruling as a key first step in the process, arguing that the latest court ruling was was win for the former president.
The former president has denied any wrongdoing, saying Judge Engoron acted in a partisan manner and said the case, brought by New York Attorney General Letitia James, is a form of election interference.
