As Donald Trump’s social media company, Trump Media & Technology Group Corp., hits the stock market with a debut stock price near $50 and a market value of approximately $6.8 billion, potential investors are questioning whether the stock is overpriced and too volatile. Many of Digital World Acquisition Corp.’s investors were small-time investors looking to show support for Trump or capitalize on the hype, leading to a significant increase in the stock price in anticipation of the merger.
Despite its high valuation, Trump Media has yet to turn a profit, reporting a loss of $49 million in the first nine months of the previous year. The company’s revenue was just $3.4 million, with substantial interest expenses of $37.7 million. Trump Media highlighted the risks associated with new social media platforms and the expectation of continued operational losses “for the foreseeable future” in a recent regulatory filing, adding another layer of uncertainty for investors.
In addition to financial challenges, Trump Media faces competition in the social media arena and risks associated with former President Trump’s nearly 60% ownership stake in the company. The disclosure of Truth Social’s user numbers, estimated at around 5 million active users in February by research firm Similarweb, will likely provide more insight into the platform’s performance. Future developments, legal proceedings involving Trump, and the potential impact of his decisions on the company’s direction all contribute to the unpredictable nature of investing in Trump Media.