President Trump’s stake in the company is now valued at $4.87 billion, and owning the stock is perceived as lending support to the former president.
The stock performance of Trump Media & Technology Group (TMTG) blew past expectations as shares surged by more than 24 percent in the company’s first week of trading after going public.
TMTG, the parent company of Truth Social, started
trading under the ticker symbol DJT on NASDAQ starting March 26 after earlier merging with Digital World Acquisition Corp. (DWAC). Shares of DWAC traded at $49.95 on Monday’s close. By the end of the week on Thursday, TMTG was
trading at $61.96, up by over 24 percent. The stock market remained
closed on Friday due to Easter.
President Trump holds 78.75 million shares in the company. At $61.96 per share, the former president’s stake in TMTG is now worth $4.87 billion, while TMTG’s market capitalization is at $8.39 billion. President Trump’s net worth was at $7.48 billion as of March 30, according to the
Bloomberg Billionaires Index. He ranked at the 350th spot in the list of the world’s 500 richest people.
The performance of the stock has exceeded expectations, as experts predicted shares to perform negatively. Some pointed out that TMTG has not made a profit. The firm only made $3.3 million between January and September 2023. During this period, it registered losses worth $49 million.
TMTG’s fate is intricately tied to President Trump, as admitted by DWAC in a
filing with the U.S. Securities and Exchange Commission (SEC) back in November. The company stated in the filing that if President Trump were to stop devoting “substantial” time to Truth Social, TMTG’s business would be “adversely affected.”
“TMTG’s success depends in part on the popularity of its brand and the reputation and popularity of its Chairman, President Donald J. Trump. The value of TMTG’s brand may diminish if the popularity of President Trump were to suffer,” it said.
“Adverse reactions to publicity relating to President Trump, or the loss of his services, could adversely affect TMTG’s revenues, results of operations, and its ability to maintain or generate a consumer base.”
Supporting Trump
TMTG is currently seen as a
meme stock—one with viral popularity due to the high social sentiment attached to it.
“All the things that people use to value a company become somewhat irrelevant” when it comes to meme stocks,
said Thomas Hayes, chairman and managing member of Great Hill Capital to The Hill, “because it’s about faith. It’s about being part of something bigger.”
In the case of TMTG, the focus is on supporting President Trump. While some may look to short TMTG stock, believing it to be overvalued, Mr. Hayes advised against it, calling it a “bad move” since the investors have “shown that they are loyal through thick and thin.”
The
merger between DWAC and TMTG took place after overcoming several hurdles. The merger was announced way back in 2021. However, since then, DWAC has faced investigations by the Justice Department, agreed to an $18 million settlement with the SEC over inaccurate disclosures, removed its chief executive, and made changes to its board.
According to TMTG, the
commencement of DJT’s trading on public markets is a testimony to the American demand for free speech online, rejecting the “stifling censorship” imposed by big tech firms.
TMTG CEO Devin Nunes has committed to protecting free speech on the platform.
“We built this company to protect the American people’s voices and their freedom,” he said. “Having transformed into a public company, Truth Social remains committed to maintaining and vehemently defending a digital space for free expression.”
Eric Swider, former CEO of Digital World and new director of TMTG, said that he is “thrilled to be stepping into the role of Director” at the combined company.
“Devin’s leadership and vision for what we can achieve together are truly inspiring. I am confident that under his guidance and the leadership team of TMTG, our combined strengths are expected to lead us toward groundbreaking achievements,” Mr. Swider said.
While President Trump’s stake in TMTG is worth billions, he cannot
cash it out right now. All shareholders of TMTG, including the former president, are subject to a lockup period of six months post the merger, during which time they are prohibited from selling shares.
The lockup period exists to prevent major shareholders from cashing out immediately after merging, which will crash stock prices. Shareholders are also prohibited from offering shares as collateral to raise loans during the lockup period.
A potential way to benefit from the stake during the lockup term could be by transferring shares to a trust and then using the trust to pledge the stock and raise a loan. Another way could be by transferring the shares to an immediate family member.
