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TRUMPs' Social Media Firm Soars 1st Day -'Looks Like a Ponzi Scheme'
TRUMPs' Social Media Firm Soars on Its Stock Market Debut in New York..BUT Restrictions Prevent Him From Selling or Borrowing Against His Shareholding For SIX Months.
'Looks Like a Ponzi Scheme to Me': Questions Raised About TRUMPs' Truth Social Value
MSNBBC 27 MAR 2024
Shares in Donald Trumps’ social media business soared on their stock market debut in New York yesterday – valuing the former US presidents’ stake at nearly £5billion.
Trump Media & Technology Group, which is behind his Truth Social platform, rose almost 60 per cent to $79 on the Nasdaq in early trading.
That gave the company a value of over £7billion – making Trump’s 58 per cent stake worth £4.9billion.
The stock – which trades under the ‘ticker’ DJT in a nod to Trump’s initials – later closed up 16 per cent at $57.99.
The rally will come as a welcome boost for Trump, 77, as he faces huge legal bills while at the same time running for president again.
Flying start: Trump Media & Technology Group, which is behind the Truth Social platform, rose almost 60% to $79 on the Nasdaq in early trading
However, lock-up restrictions could prevent him from selling or borrowing against his shareholding for six months.
That means Trump is still far away from a windfall, which will be tied to how well the shares do over the next few months.
And analysts have warned that shares in Trump Media may already be overvalued given it has yet to make a profit.
‘The valuation of the business is rich relative to its underlying fundamentals,’ said Thomas Hayes, chairman of Great Hill Capital.
‘This valuation may be more of a proxy on the enthusiasm of supporters for Trump than a reasonable estimate of underlying business prospects.’
PONZI Scheme
On Monday morning's edition of MSNBC's "Morning Joe," co-hosts Joe Scarborough and Mika Brzezinski questioned the value assigned to Donald Trump's Truth Social following a merger that was put to bed last Friday.
Noting the meager traffic the social media platform has drawn from users in its three years of existence, the hosts, along with MSNBC host Jonathan Lemire, were highly skeptical of its valuation north of $3 billion.
Scarborough kicked off the questioning by cutting to the chase and saying the publicly traded stock has the makings of being part of a scam that will leave some new investors holding the bag while Trump walks away with their cash.
"I'm not exactly sure how his Truth Social deal is going the way it is, but it looks like a Ponzi scheme to me," Scarborough began. "But I don't understand it. This is, though, a social media network that doesn't appear to be successful. Yet people are throwing around $5 billion here, $5 billion there. Does that provide Donald Trump an economic lifeline in the short term?"
"You're right about Truth Social," Lemire agreed. "It is a website that, frankly, no one uses. It has very little traction outside of the extreme MAGA right. It is where Trump continues to post since he was kicked off of Twitter after January 6th. I believe he's only posted one thing [on Twitter] since, which was his mugshot when he was indicted in Georgia last summer."
"He's still trying to drive interest to Truth Social," he continued. "It's not really working; there have been, you know, merger deals rumored for a couple of years now. It all fell apart."
"Where does this massive valuation come from?" Scarborough interjected.
"In a free and open and fair market, I mean, if you're just talking about economic considerations, who would invest in this company unless you were trying to curry favor with somebody who you think will be the next president of the United States," he added.
Lemire replied, "You hit it there. Someone trying to curry favor with who they believe will be the next president of the United States. We've seen people do that of late.
With Truth Social, it is not a success by any measure. Investors will lose a LOT OF MONEY"
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