Trump Media shares crash to record low even as new polls gives ex-president’s campaign a boost
Donald Trump's recent claim he won't sell his nearly 115 million shares in Truth Social parent company Trump Media and Technology Group (TMTG) could only briefly stop the sell-off in its stock.
Donald Trump’s political fortunes are starting to diverge from his financial fortunes.
Shares of the former president’s social media group fell to an all-time low Monday, even as the latest polls suggest it is gaining ground in a handful of key Sun Belt states.
Until recently, the stock price of its parent company Truth Social was widely seen as a gauge of its chances in November.
A New York Times-Siena College poll released Monday shows it maintaining its lead in Georgia while leading Harris in Arizona and North Carolina after their contentious debates this month that saw Trump go viral for claiming immigrants eat pets.
It was also the sixth straight day of strong selling at Trump Media and Technology Group (TMTG), the parent company of Twitter clone Truth Social, after a brief respite when Trump told reporters he had no plans to sell nearly 115 million shares of his company’s stock.
It closed down 10% in the session to close at $12.15, its lowest level since it first announced three years ago its intention to go public through a reverse merger with a blank-check investment vehicle known as a SPAC.
That means the value of Trump’s 59% stake in the company, which until this week was subject to a six-month lockup period following the SPAC merger, has shrunk to just $1.4 billion from its March peak of more than $9 billion.
Assuming Trump doesn’t sell his stake as he claims, the selling pressure won’t necessarily abate either.
Billion-dollar valuation, multi-million-dollar sales
With its stock meme and refusal to disclose anything about the fundamentals driving its business, financial analysts are avoiding the stock.
There isn’t a single estimate on Yahoo Finance for this year’s revenue, much less profit or, in TMTG’s case, loss.
Applying the same 7.5x price-to-sales multiple to next year’s revenue that Reddit is currently trading on TMTG stock would give it a market cap of about $25 million.
That’s a fraction of the $2.4 billion TMTG is currently worth, and it’s on track to have annual sales of well under $4 million (using the “m”).
Excluding the $344 million from the SPAC deal—cash that investors typically don’t assign a multiple to above its stated value—the total assets on its books that could potentially generate dividends for shareholders stood at just $12.5 million at the end of June.
Fortune was unable to reach TMTG officials for comment. When contacted via TMTG’s Truth Social, Trump did not respond to a request for comment.
“A directional bet on his brand value.”
Given Trump’s need to raise money to cover hundreds of millions of dollars in court fines and a lack of unencumbered assets he could easily liquidate, investors don’t seem willing to take the former White House resident’s words seriously.
Last week, he announced his latest marketing plan: selling one-ounce silver coins engraved with his face for $100 each, more than three times their current intrinsic value.
Chamath Palihapitiya, an early Facebook investor known for promoting SPACs during the pandemic boom, sarcastically predicted that TMTG would be a “directional bet on the value of his brand” and something akin to the official currency that Trump just unveiled.
Speaking on the All-In podcast shortly after TMTG began trading in March, he said the stock was “effectively a trading token, or a baseball card if you will — a trading card through a stock” based on the former president’s name recognition and likeness.
Trump may have inadvertently hurt his own investment story by announcing Sunday that he would not run for president again if he lost in November. By removing him from any future race, he risks losing his influence in shaping the Republican Party.