NEW YORK – Shares of Trump Media & Technology Group (TMTG) surged more than 45 per cent on March 26 in their debut on the Nasdaq that came more than two years since its merger with a blank-cheque firm was announced.
At US$72.46, the company’s market capitalisation was US$9.55 billion (S$12.85 billion) on an undiluted basis. Trading in the shares under the ticker “DJT” was briefly halted for volatility just after the opening bell.
Donald Trump’s majority stake in TMTG was last valued at US$5.55 billion although lock-up restrictions for six months could prevent him from selling or borrowing against his shareholding.
TMTG, which owns social media platform Truth Social, officially merged with blank-cheque company Digital World Acquisition on March 25.
Shares of Digital World, which is now TMTG, surged more than 35 per cent that day.
“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,” said Mr Thomas Hayes,chairman of Great Hill Capital.
“This valuation may be more of a proxy on the enthusiasm of supporters for Trump than a reasonable estimate of underlying business prospects.”
Retail trader-focused social media and trading platform Stocktwits listed TMTG as the most trending stock in morning trading.
Trump’s financial woes
Trump, who is facing four criminal trials in his race to the United States presidency, has been struggling to raise money for his campaign and legal expenses.
Meanwhile, a pause to a ruling that would have blocked New York state authorities from seizing his assets bought Trump some financial breathing room as he tries to build a campaign war chest and keep his real-estate empire intact.
The deal will inject US$300 million in cash to Truth Social, which lost US$10.6 million from its operations in the first nine months of 2023.
The company also provides a way for supporters of Trump to bet on his resurgence as a political figure, as evidenced by shares of shell company Digital World Acquisition nearly tripling in value in 2024.
Reddit user Chester-Ming posted “the (Trump) hype has the potential to offset everything – shitty fundamentals, insane dilution and more”, on 15 million-large “wallstreetbets” investor forum, although the user warned that Trump could potentially cut his stake.
Digital World said in a filing in February that Trump may divest his stake in Truth Social and cease any involvement in its management based on how his bid for president goes.
The special purpose acquisition firm signed its merger agreement with Trump’s company in October 2021 and since then has been the target of investigations by the US Department of Justice.
It reached an US$18 million settlement with the US securities regulator over inaccurate disclosures in July 2023.
Shareholders voted in favour of the deal last week, more than a month after the regulator gave the green light for the deal. REUTERS
