Donald Trump‘s Trump Media & Technology Group made a remarkable debut on the Nasdaq, with shares soaring by up to 59%.
This surge, fueled by support from the former U.S. president’s followers, presents a significant financial opportunity for Trump amidst ongoing legal battles.
TMTG’s market capitalization surpassed $10 billion, despite reporting an operating loss of $10.6 million for the first nine months of 2023 on revenue of just $3.4 million. The stock closed 16% higher, valuing the company at nearly $8 billion.
Trump’s majority stake in TMTG, valued at approximately $6 billion, faces restrictions preventing him from selling or leveraging his shares for six months.
The stock’s debut follows its merger with Digital World Acquisition Corp, a blank-check company, announced in 2021, despite facing setbacks and delays.
Both Digital World and TMTG have seen a surge of nearly 600% since the merger announcement, solidifying TMTG’s position as a “meme stock” popular among retail traders, driven by social media discussions.
Thomas Hayes, chairman of Great Hill Capital, noted that while the stock’s valuation may exceed its fundamental performance, caution should be exercised in the short term.
Trump’s financial challenges, including legal expenses amid four criminal trials and fundraising difficulties for his political campaign, have prompted the surge in TMTG’s stock. The company also offers a platform for Trump supporters to invest in his political resurgence.
TMTG’s rise led to losses for short sellers, totaling $158 million in paper losses this year. Despite concerns about the stock’s valuation, the deal injects $300 million into TMTG-owned social media platform, Truth Social.
Truth Social, launched in 2022, attracted 8.9 million sign-ups by February. Its valuation per user far exceeds that of established platforms like Twitter and Facebook.
The merger agreement between Digital World and Trump’s company, signed in October 2021, has attracted scrutiny from the U.S. Department of Justice, but the company presses forward with its ambitious plans.