Former President Donald Trump’s media company hit the public markets hot on Tuesday, closing out its debut day trading with an $8 billion valuation. It ended a shortened trading week another $390 million higher.
Trump Media & Technology Group stock rose as much as 59%, to $79.38, during its first day on the Nasdaq, finishing the day up 16%, at $57.99 per share, after the initial excitement waned.
At the end of the trading day on Thursday, Trump Media stock closed at $61.96 per share, heading into the long Easter weekend with a market capitalization of $8.39 billion. (Markets were closed on Friday for the Good Friday holiday.)
The performance has led several analysts to lump Trump Media in with so-called “meme stocks” such GameStop, AMC, and Reddit — the latter of which went public last week to much fanfare.
Meme stocks refer to company shares that become wildly popular online and are traded feverishly by retail and individual investors, sending prices soaring regardless of the company’s actual operating results or prospects.
In that sense, Trump Media is a quintessential meme stock. The company behind Trump’s Truth Social platform had a loss of $10.7 million in the first nine months of 2023, plus another $37.7 million in interest expense, while generating just $3.4 million in revenue. The company has even said in regulatory filings that it will lose money “for the foreseeable future.” And Truth Social had just five million total site visits worldwide last month, according to SimilarWeb.
Still, at one point on Tuesday, Trump Media’s valuation topped $10 billion.
“GameStop was the meme stock of a lifetime, but Trump Media has put it to shame,” Michael Pachter, an analyst at Wedbush Securities, told the Associated Press. He noted that GameStop had revenue of more than $5 billion when it got swept up in the meme stock craze in 2021, while Trump Media’s reported revenue is not even one-tenth of that.
Rather than pursuing a traditional IPO, Trump Media went public by merging with Digital World Acquisition Corp. (DWAC), a special purpose acquisition company, or SPAC. Truth Social is the entity that it acquired.
Analysts warned that a lot of the initial enthusiasm around Trump Media’s public debut was likely driven by Trump fandom, with little regard to its underlying business. Thomas Hayes, chairman of Great Hill Capital, told Reuters that the company’s valuation “may be more of a proxy on the enthusiasm of supporters for Trump than a reasonable estimate of underlying business prospects.”
Anne Stevenson-Yang, co-founder and research director of the short-selling firm J Capital Research Ltd., similarly told Bloomberg that she “would not go near it.”
“This is a crazy meme stock that’s pumped by Trump fanboys,” she said.
The concept of meme stocks has been a thorn in the side of short sellers — traders who bet that stocks will fall by borrowing shares and selling them high with the belief that they can be repurchased later at a lower cost. Those investors lost some $61 million from Tuesday’s surge in Trump Media stock, according to data from S3 Partners.
“There is huuuuge conviction (Trump pun intended) on the short-side that there will be a significant decline in its stock price in the short term,” wrote Ihor Dusaniwsky, S3’s managing director of predictive analytics. “But… long shareholders have a much different and much more positive view” on the media company.
Experts say the craze around Trump Media will die out. Eventually.
“Even if you’re a big believer — ‘this is a bubble, it will eventually burst’ — the issue is, eventually could be a long time,” Lawrence White, an economics professor at New York University’s Stern School of Business, told CNN. “And in the interim, especially if you’re on the short side, that can be very expensive.”