Shares of DJT, Trump Media and Technology Group, jumped on the Nasdaq

Shares of DJT, Trump Media and Technology Group, jumped on the Nasdaq
Shares of DJT, Trump Media and Technology Group, jumped on the Nasdaq

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Backed by legions of ardent supporters, Donald Trump made a spirited debut on the Nasdaq stock exchange on Tuesday.

Shares of Trump Media & Technology Group soared from the opening bell and held on to most of those gains until the end of the trading day, when a selloff sent Trump’s eponymous social media company closer to the ground with a closing market value of nearly $8 billion.

It was also an epic trading day for Trump, the presumptive Republican presidential nominee and the largest shareholder of Trump Media. The stock rose as high as $79.38 before ending the day at $57.99, closer to its low for the day.

His 60% stake in Truth Social’s parent company, which now trades under the ticker DJT, is worth about $4.5 billion on paper. And if the stock price remains above $17.50 per share for an extended period of time, tens of millions of additional shares will be issued, most of them to Trump.

Enthusiasm in MAGA’s ranks was tempered by the more sober assessment of stock market watchers. They say Trump Media’s valuation is divorced from the business realities it faces.

Its flagship product Truth Social, Trump’s megaphone of choice, is a minor player in a social media landscape dominated by megacorporations such as Facebook owner Meta. Trump Media, on the other hand, has racked up tens of millions of dollars in losses but meager sales and has struggled to attract advertisers and consumers since its 2021 launch.

It owes its success to Trump, who is one of Truth Social’s most prolific users and has among the most followers on the platform with nearly 6.8 million. Trump has 34 million followers on Facebook, 24 million on Instagram and more than 87 million on X.

«It’s hard to come up with any reasonable metric to get you to that valuation,» Derek Horstmeier, a finance professor at George Mason University in Virginia, told USA TODAY.

The one-day bounce has been typical of so-called meme stocks in recent years, such as video game retailer GameStop. Trump supporters rallied on social media to lift the stock even before the merger with Digital World Acquisition Corp., a special purpose acquisition company, or SPAC, that had already been listed on the Nasdaq was completed.

The difference here may be that fans of the former president may continue to raise, rather than dump, the stock.

Trading was extremely heavy, according to University of Florida finance professor Jay Ritter. The number of shares available for trading – called the public float – is about 28 million. But more than 52 million shares traded on Tuesday. In fact, trading was so intense that Nasdaq temporarily halted it after the first bell. Typically, most stocks trade below 1% per day.

«Obviously a lot of the buyers and holders are people who are buying it for ideological reasons and plan to hold it for a while,» Ritter said.

That’s not so different from the online merchants, mom investors, small brokers and others who organized on the social media platform Reddit to raise GameStop’s price and confront the hedge funds that were betting against the company and shorting the stock.

«For that matter, the GameStop investors were doing it for ideological reasons as well,» Ritter said. «But once the stock price went up, they sold and the stock price crashed.»

No one knows when the Trump Media bubble will burst, he said. Just because you’re a Trump supporter doesn’t mean you’ll be a Trump supporter forever, Ritter said.

«In the short term, anything can happen,» he said. «But in the long term, I strongly believe there will be a huge percentage decline.»

How much does Truth Social cost?

Those Trump Media shares gave Trump a crucial lifeline in posting bail while he appeals his civil fraud conviction.

An appeals court in New York gave Trump 10 more days to pay his bail and reduced the amount to $175 million. Trump is struggling under the weight of not only a $454 million civil fraud conviction, but also the loss of an $83.3 million defamation lawsuit against columnist E. Gene Carroll.

Trump’s gains so far are only on paper. He would need Trump Media’s seven-member board to lift the restriction, which prevents Trump and other insiders from selling stock or using it as collateral for bonds for the next six months. Trump’s gains so far are only on paper. He would need Trump Media’s seven-member board to lift the restriction, which prevents Trump and other insiders from selling stock or using it as collateral for bonds for the next six months.

The board, which includes allies including his son Donald Trump Jr. and three former members of his administration, may also have a secondary offering that would allow Trump to cash in some of his stake in the coming months.

What is Trump’s net worth?

Truth Social going public means a huge boost to Trump’s net worth, at least on paper.

His holdings in Trump Media and a reduction in the bond Trump must post in a civil fraud case in New York boosted his net worth by more than $4 billion on Monday, catapulting him into the world’s 500 richest people on the index of Bloomberg Billionaires for the first time.

Why is Truth Social’s ticker DJT?

Research shows that familiar names, such as the initials of a former president, can help drive a company’s stock.

A 2006 study by psychologists at Princeton University found that stocks with tickers that are easier to pronounce tend to perform better in the first few days of trading. Another study from Pomona College in 2019 confirmed earlier research that smart tickers tend to outperform, in part because they are more memorable to investors.

What is Digital World Acquisition?

Digital World is a SPAC, also known as a blank check company. These publicly traded shell companies exist to acquire or merge with private companies and take them public.

Truth Social’s merger with Digital World was first announced in 2021 as the number of companies going public through SPACs increased. Since then, the investment vehicles have faced criticism for being bad deals for retail investors.

Why did Trump start Truth Social?

Truth Social was founded after Trump was booted from major social media platforms following the attack on the Capitol on January 6, 2021.

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