Trump Media Shares Swing Wildly With Business Case Back in Focus

(Bloomberg) -- Investors have used Donald Trump’s social media company to bet on his reelection, sending the loss-making company’s valuation soaring to nearly $7 billion as of Monday ahead of his expected win.

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Once it became clear Trump would reclaim the White House, shares surged, adding as much as 62% before Wednesday’s open. Since then, it’s been choppy sailing. Trump Media & Technology Group Corp.’s shares fell about a fifth from Monday’s close to Thursday’s, then roared back as much as 16% on Friday, triggering a volatility halt when the president-elect again pledged not to sell any shares.

Traders are searching for a new framework now that the election has passed. Trump Media’s financial prospects still look bleak, and with the contest in the rear-view mirror, investor attention will be shifted toward its value as a company.

“Trump winning the election does nothing to change the underlying fundamentals of the business or its prospects,” Jack Ablin, chief investment officer at Cresset Capital.

Trump Media’s $6.7 billion market value and lack of revenue showcase the company’s detachment from its fundamental value and that it’s “still a meme stock,” Ablin said.

A representative for Trump Media didn’t respond to a request for comment.

Trump remained unusually silent on the platform for nearly 48 hours after west coast polls closed, breaking from routinely posting on Truth Social as much as dozens of times a day. Posts resumed Thursday night, and on Friday, the president-elect insisted rumors he was considering selling his stake were false and that he had no intention of selling.

“I hereby request that the people who have set off these fake rumors or statements, and who may have done so in the past, be immediately investigated by the appropriate authorities,” Trump wrote.

X Obsession

If Trump posts exclusively on Truth Social, the company’s social media platform, that could present a bull case for buyers, some on Wall Street noted, though its staying power and ability to drive real value is less clear.

Trump’s obsession with posting on Twitter — which has been rebranded as X — in his first term as president is among the many concerns for investors hopeful that Truth Social will become his preferred mouthpiece. His relationship with X’s owner Elon Musk, who emerged as a key campaign ally this year, further complicates things.

There’s also the reach Musk’s platform brings, that Truth Social has yet to attain. Trump has 93.6 million followers on the platform, which is 11 times those that see his Truth Social posts.

“As long as Musk and Trump are on good terms and Musk is involved in some way, I expect him to use X more than his own platform,” said Bloomberg Intelligence senior tech industry analyst Mandeep Singh.

Still, Trump Media skeptics point to the lack of traction for the shares in the run-up to the election, when advertising arguably should have spiked. The company quietly disclosed that it lost $19 million in the third quarter on revenue of just $1 million, with net losses piling to $363 million in the first nine months of the year.

Even if the platform were to grow its user base exponentially, it’d lag the traffic for Musk’s X. Trump’s platform actually saw users decline on a monthly basis in October, when shares doubled and betting markets swung in favor of the president-elect. There were less than 350,000 daily active users in September, data compiled by the research firm Apptopia show, less than 0.3% of X’s activity.

With a $6.7 billion valuation, the company has a price-to-sales ratio over 2,000 which is about 135 times that of Rumble Inc., a right-wing video site backed by Trump’s running mate, JD Vance. By comparison, it’s blown away the peak metrics for other meme stocks GameStop Corp. and AMC Entertainment Holdings Inc., which peaked at four and 14 respectively, data compiled by Bloomberg show.

“Anyone talking about ‘improving operations’ isn’t talking in reality,” said Brian Quinn, a law professor at Boston College. “The only value this stock has is as a retail proxy for Trump.”

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