Sally Reed
Shares of Truth Social, the social media company of Donald Trump, reportedly jumped close to 40% in the first day of trading on the Nasdaq. This significant bump increased the value of the large holdings of the company owned by the former U.S. President. Other reporters have confirmed that the supporters that purchased smaller stakes also benefited from it.
Blank Check Company Acquired Trump Media On Monday
Digital World Acquisition Corp, a blank-check company, acquired Trump Media & Technology Group Corp. on Monday. The social media platform Truth Social is operated by Trump Media.
Therefore, Truth Social has reportedly taken the spot in the Nasdaq stock exchange that was previously occupied by Digital World.
What Is A ‘Blank-Check Company?’
A “blank-check company” is one that is a developmental stage company that is publicly traded and does not have an established business plan. These companies are typically used to gather funds for startup businesses.
In most cases, the intent of a blank-check company is to acquire or merge another business entity – such as in the case of Truth Social.
Trump Media Previously Had A $6.8 Billion Market Value
Before the trading on the Nasdaq began, Trump Media was valued at nearly $6.8 billion. If the early gains from these shares hold, that figure will likely increase substantially.
The shares are reportedly trading under the ticker symbol “DJT’, which are also the initials of the former U.S. President. Donald Trump currently owns 60% of the company.
Many Trump Media Investors Are ‘Small-Timers’
Multiple reports have confirmed that a considerable number of the people investing in Trump Media are “small-timers.” Some either invested to support Donald Trump or cash in on buzz surrounding Donald Trump and his controversial social media platform.
However, with the news of the substantial increase in share value, it would not be surprising if Truth Social gets a little more attention from professional investors and major institutions.
Trump Media Lost $49M In First Nine Months Of 2023
Before investors get too excited about the bump in share value, it is imperative to consider the full history of Trump Media. For instance, the company reportedly lost $49 million within the first 9 months of 2023 alone.
Further reports show that the company had to pay $37.7 million that year in interest expenses. In addition, it only generated $3.4 million in revenue.
Trump Media Blamed Financial Downfall On Failure Of New Social Media Platforms
The company cited within a recent regulatory filing that the financial setback was due to the high percentage of new social media platforms that fail. The company also expected to lose money “for the foreseeable future” on its operation as risks for investors consider.
As of this morning, the shares were up to approximately 39% and valued at $69.52 each.
Trump Media Success ‘Highly Dependent’ On Popularity Of Donald Trump
Trump Media highlighted the key to its success in a regulatory filing. The Palm Beach-based company stated that its success is “highly dependent on the popularity and presence of President Trump.”
If Trump ever decided to cut them off or even limit his relationship with the company, the company admitted that it “would be significantly disadvantaged.”
Trump May Have To Limit Relationship With Truth Social Due To Campaign
One of the reasons why Donald Trump may have to limit or even sever his relationship with Truth Social is due to his current campaign to become the U.S. President again in this year’s election. It was recently announced that Trump has been confirmed by the GOP as the nominee for the Republican Party.
There are other more pressing concerns regarding Donald Trump that are on the minds of investors, though.
‘Adverse Outcome’ In Any Legal Case Could Negatively Affect Truth Social
The company specifically referenced the potential impact of the legal proceedings against Donald Trump on their stock market performance. The company stated that “an adverse outcome in one of more” of the legal cases against the former U.S. President could negatively affect Truth Social and Trump Media.
According to The Atlantic, Donald Trump currently faces 91 felony counts across two different federal districts and state courts. Any of those counts could potentially lead to a prison sentence.
Trump’s Truth Social Posts Could Backfire In Court
Some of Donald Trump’s social media posts on his Truth Social platform may backfire on him in court. For instance, Trump’s legal team admitted in a recent court filing that Trump has not been able to secure the bond amount required.
However, in a Truth Social post, Trump claimed that he had $500 million in cash available to him. Trump wrote that “through hard work, talent, and luck, I currently have almost five hundred million dollars in cash.”
Trump Claimed To Have $500 Million Reserved For Presidential Campaign
Within the same Truth Social post, Trump stated that he intended to use “a substantial amount” of the $500 million for his presidential campaign. He then claimed that the “often overturned political hack judge” from the “rigged and corrupt A.G. case” wanted to take the money away from him.
According to Trump, that was “where and why he came up with the shocking number” of approximately $454 million.
Former U.S. Attorney Confirms Judges Are Entitled To Look At Trump’s Posts
Former U.S. Attorney Joyce Vance stated that the judges ‘are certainly entitled to take a look at Trump’s posts in this vein.” Vance opened up about the topic during a recent interview with MSNBC.
Vance further explained that “it would be fair to deny him any sort of measures for forgiveness of the full amount of the bond in the form of the surety bond he has asked for simply because he says he can afford it and chooses not to.”
Donald Trump Could Vote His Shares In His Own Interest
As a controlling stockholder, Donald Trump is allowed to vote his shares in his own interest. Reports confirm that this may not always be in the best interests of all the shareholders, however.
Investors should reportedly expect that the shares will be volatile. That perception is based on recent trading activity.
Donald Trump Started Truth Social After Being Banned From Major Platforms
Donald Trump first launched his social media platform, Truth Social, after he was banned from major social media platforms. The bans occurred shortly after the January 6th attack on the U.S. Capitol.
Truth Social, which was officially launched in early 2022, was then frequently used by Donald Trump and his supporters. Trump has since been reinstated to Facebook and the Elon Musk-owned platform X/Twitter.
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