Donald Trump’s new public social media company is not the next Nvidia — not Meta, not Google, not anything that happened with X/Twitter.
The stock price of Trump Media and Technology Group, trading under the ticker symbol DJT (because of course it is), jumped after its SPAC merger was finalized last week. A SPAC, or special purpose acquisition company, is a shell company – in this case, Digital World Acquisition – that goes public with the intention of buying a real company later. For a time, TMTG’s market cap was in the $9 billion range, making it more valuable than Etsy and Hasbro. This brought the former president’s net worth to $7 billion, but not in a way that he could profit immediately. Unless the company’s board of directors decides otherwise, Trump will not be able to sell his shares for six months.
If I were Trump, however, I would cajole the board to speed up this lock-up period so I could cash out. It seems, shall we say, unlikely that his media company’s stock price will stay this high forever.
On the one hand, TMTG, which owns the conservative Twitter copycat Truth Social, does virtually nothing. Its total revenue was $3.4 million through the first nine months of 2023. Extrapolating that, the stock is likely trading at around 2,000 times the company’s annual revenue. It’s, uh, high. Apple, for example, trades at around seven times its total revenue. And considering TMTG’s paltry revenues, it lost $49 million during the same period.
Trump’s company says it has bigger plans ahead, like expanding Truth Social and developing “one or more additional cutting-edge products and/or services” to complement Truth, including some sort of video streaming situation that “provides a ” home” for canceled content creators. Exactly what that might look like, or how many people would flock there, is unclear.
Truth Social saw about 5 million monthly visits to its website in February of this year, according to third-party trackers, but the company doesn’t reveal exact metrics at this time. For comparison, Facebook had 845 million monthly active users when it went public in 2012, and Twitter had 215 million when it went public the following year. In summary, TMTG is not a successful business.
But perhaps other social media, designed to appeal to the widest possible audience, isn’t a good comparison. Truth Social and any other companies created by Trump Media and Technology Group are almost guaranteed to appeal only to Trump fans.
Trump’s media company is not the first conservative company to go public via SPAC in recent years and attempt to make money from right-wing consumers and investors. Its predecessors were not as hot. Rumble, a right-wing YouTube backed by Peter Thiel, rose about 40% on its first day of trading in September 2022 and has been well below that figure ever since. Black Rifle Coffee, a Starbucks for Republicans, and Public Square, the Republican Party’s supposed alternative to Amazon, followed similar trajectories: stocks rising at first, then staying below $10 ever since. None of them have achieved sustainable profitability, although Black Rifle says it is on track to do so.
My guess is that Trump has a much better chance of winning the White House (or ending up with criminal convictions) than seeing his mediocre social media business take off.
Being in the anti-woke business isn’t particularly lucrative. Even though people say they want to shop and invest their values, this often turns out not to be the case. Instead, most people opt for the convenient option and what they are already used to. There’s a reason most boycotts don’t work: people are busy and tired. This is also true on the left. Dig deep enough, and every company in the world can probably give you a reason to not want to give them your money.
Could Trump and Truth Social be different, at least on the stock market? I mean, I guess anything is possible. As my colleague Peter Kafka points out, investors aren’t yet selling stocks en masse, partly because it’s difficult and partly because you can see DJT taking off with the meme stock crowd. GameStop and AMC weren’t particularly successful from a business perspective when they reached meme status, but small investors were eager to jump in. For much of the country, pumping money into Trump’s business is not only a way to stick it to The Man but also to The Woke Man. Trump has also spent years insisting that his name is worth a ton of money, and I guess we’re about to find out how much.
Still, I suppose Trump has a much better chance of winning the White House (or ending up with criminal convictions) than seeing his mediocre social media business take off. He may want to call someone from the TMTG board – say, his son Don Jr. – and make sure they set up a meeting to allow him to start getting rid of the shares as soon as possible .
Emilie Stewart is a senior correspondent at Business Insider, writing about business and economics.
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