Trump’s Social Media Stock Falls 50%, $3B Loss

Former President Donald Trump’s social media venture, Trump Media, continues its downward spiral in the stock market. Just two weeks ago, the company boasted a valuation of over $10 billion, but that figure now appears to be a fleeting dream.

Shares of Trump Media, the parent company of Truth Social, a right-wing social media platform majority-owned by Trump, plummeted 8% on Monday, settling just above $37 per share. This marks a 54% drop from the peak of $79 per share that Trump Media reached on March 26, its first day of trading under the ticker symbol DJT after completing a reverse merger with blank-check company Digital World Acquisition Corp.

As a result of this decline, the value of Trump’s 58% stake in Trump Media has also taken a hit, plummeting from $6.25 billion to $2.93 billion in just 13 days.

The current valuation of Truth Social, based on average revenue per user and market value to revenues, is estimated to be between $40 million and $90 million. Trump Media’s price-to-sales ratio stands at roughly 1,250, significantly higher than that of Reddit, which has been a cause for concern among some on Wall Street due to its high valuation compared to its fundamentals.

Truth Social was launched in early 2022, approximately a year after Twitter, Facebook, and Instagram suspended Trump for his involvement in the January 6, 2021 Capitol riots. Trump Media opted for a public listing via a special-purpose acquisition company (SPAC) instead of an initial public offering, following nearly 2.5 years of regulatory hurdles. Despite being reinstated on mainstream social media platforms, Trump continues to use his Truth Social account as his primary means of communication.

Since its public debut, Trump Media has demonstrated atypical stock behavior. It is reportedly the most expensive American company to short, with investors betting against its share price having to pay brokers approximately $1 per day, roughly 1,000 times the typical fees associated with short trades.