Former President Donald Trump’s media venture, Trump Media & Technology Group (TMTG), which controls Truth Social, has encountered significant financial troubles. Although the company initially gained attention with its Nasdaq debut this past spring. Experts now warn that it may be dramatically overvalued. Despite Trump owning nearly 15 million shares in the firm. Both the company and its associated social media platform remain small players in a highly competitive market. With dwindling revenues and weak financial fundamentals, the value of Trump’s shares has plummeted.
A Sharp Drop in Stock Value
Shares of Trump Media & Technology Group have taken a severe hit since their peak in March 2024, where they reached $66.22 per share. Since then, the stock has lost nearly 72% of its value, hitting a record low last week before a slight rebound. This drop has resulted in a significant loss for Trump himself, who holds a dominant stake of 114.75 million shares. Initially worth $6.2 billion in May, his shares are now valued at just $2.1 billion. This drastic reduction has even removed Trump from Bloomberg’s prestigious Billionaires Index of the 500 wealthiest individuals globally
The Overvaluation of Trump Media
Many industry experts argue that TMTG’s multi-billion-dollar valuation was always unrealistic. Truth Social has struggled to gain significant traction in the competitive social media landscape, and the company’s revenue has been minimal. Despite bringing in just $837,000 last quarter, the company is burning through cash, raising doubts about its long-term sustainability.
“If this wasn’t Trump, this thing would be trading at $1,” says Matthew Tuttle, CEO of Tuttle Capital Management. Analysts agree that the value of Trump Media’s stock is tied closely to Trump’s political standing, creating an environment where financial fundamentals are overshadowed by political speculation.
Political Factors Weighing on Stock Performance
Some experts believe that political developments are playing a crucial role in the company’s falling stock prices. Trump Media has lost nearly half its value since July, a period marked by significant shifts in the political landscape, including President Joe Biden’s decision to drop out of the 2024 race and endorse Kamala Harris.
“This stock is entirely a Trump-gets-elected play,” says Tuttle. Investors are betting on Trump’s political comeback, and many believe that the company’s future is tied directly to his success in the 2024 election. If Trump wins, TMTG could become a viable business, but if he loses, its future looks uncertain.
Market Sentiment on Trump Media
Several prominent figures in business have voiced concerns over Trump Media’s valuation. Billionaire Barry Diller warned that those investing in the stock are being overly optimistic, calling them “dopes.” Similarly, LinkedIn co-founder Reid Hoffman noted that TMTG’s valuation is “absurdly out of the realm of normal.” Both are prominent Democratic donors, which may add a political lens to their criticism. However, their remarks echo the sentiment of many neutral market analysts who believe the company’s fundamentals are too weak to justify its current valuation.
Internal Pressures: Lock-Up Period Expiration
Adding to the uncertainty surrounding Trump Media is the impending expiration of a lock-up period that has prevented Trump and other insiders from selling their shares. As of September 20, insiders will be free to sell their holdings, a move that could cause a significant selloff if shareholders decide to offload their stock. This event could potentially drive the stock price down even further.
While Trump is the majority shareholder, selling large portions of his stock would be challenging without causing the stock price to crash. As such, even though he controls a significant amount of shares, his ability to capitalize on them may be limited.
The Future of Trump Media: Can It Recover?
Despite the challenges, there are still some reasons to believe that TMTG could see a turnaround. The company still holds over $300 million in cash and equivalents, which gives it the financial flexibility to make acquisitions or fund its operations. Additionally, Truth Social recently expanded into streaming services with the launch of Truth+, a platform aimed at conservative viewers. This diversification could help the company generate more revenue and create new growth opportunities.
However, the success of these efforts will likely depend on Trump’s political fortunes. A high-profile debate with Kamala Harris, scheduled for later this month, could provide a boost to his campaign and, by extension, his media empire.
Expert Advice: Keep Politics Separate from Profits
Financial experts are cautioning retail investors, particularly Trump supporters, to take a cautious approach with TMTG stock. The political volatility surrounding the company makes it a risky investment, and market watchers emphasize the importance of focusing on the financial fundamentals rather than political loyalty.
Conclusion: Is Trump Media a Sustainable Business?
While Trump Media & Technology Group once held immense promise, the company is now facing serious financial challenges. With its stock plummeting and its core product, Truth Social. Struggling to generate significant revenue, the future of the company is uncertain. Political developments, insider selling, and a shaky business model make this a highly volatile stock. Investors must weigh their options carefully and avoid letting political bias cloud their financial judgment.
In the end, TMTG’s fate will be closely tied to Trump’s political ambitions. If he succeeds in regaining the presidency, the company may have a fighting chance. However, without strong financial fundamentals, the long-term sustainability of the business remains in doubt.
Keywords: Trump Media, Truth Social, Stock value decline
