Ever since Trump Media & Technology Group went public earlier this year, the conversation around it has mostly focused on how big of a joke it is. Truth Social’s parent company barely made more than $1 million last quarter — during the election. It is the memeiest of meme stocks. Its founders and auditors have been accused of fraud. It was just a get-rich-quick scheme. But, obviously, the memestock traders got it right. The case for DJT, as it’s known on the stock exchange, was basically the same as buying Amazon, Uber, Google, or whatever other tech giant before it got into monopoly territory: One day, it would be too big and powerful to ignore. Now that day is upon us: Trump won the election and Republicans control Congress. These should be the exact conditions that would make Trump’s social-media company thrive.
So why is Trump Media getting absolutely hosed on Wall Street?
DJT, which was briefly worth more than the New York Times Co., has lost about half its value since late October — with most of that slide coming since Election Day — falling to $27.74 a share and cutting Trump’s personal fortune by more than $300 million. (He owns a majority of the equity.) Three of its insiders, including the chief financial officer, recently sold $16 million in stock. And Patrick Orlando, the former CEO, sold nearly his entire 5 percent stake. There is no single reason for the sell-off, but it looks like the company had set up the conditions for its own market walloping by flooding the market with shares and, well, just being a very risky stock when pretty much everything else on Wall Street is popping off.
You’d think the opposite would be happening. Trump has been using Truth Social to announce every cabinet appointment he intends to make, like Matt Gaetz for attorney general. It’s also where he appears to be looser, more combative.
“There are fake, untrue, and probably illegal rumors and/or statements made by, perhaps, market manipulators or short sellers, that I am interested in selling shares of Truth,” he wrote, adding that he would “investigate” anyone insinuating he would sell his shares. (Trump has said he won’t sell, but he would be entitled to a tax-free windfall if he sold his stake and swapped the money for Treasury bonds.) All this clearly shows that the company has some value: It’s the wire service of the most powerful world leader. And perhaps that’s reflected in the fact that the price has more than doubled since hitting a low of $12.15 on September 23.
On Truth Social, the question is: What happened? Some users are in disbelief that shares are just falling on their own and believe that various bad actors are behind it, such as shadowy short sellers and big institutions like billionaire Ken Griffin’s Citadel Securities. (Griffin and Citadel Securities were bogeymen during the 2021 memestock wildness and were wrongly blamed for shares falling. Griffin has given millions to Republicans, though not Trump directly. After Trump Media’s CEO, Devin Nunes, once accused Citadel of shorting the stock, Griffin called him a “proverbial loser.”)
“How hard is it for the SEC to make a phone call to these bad actors, or maybe stop by their office unannounced. Why is this allowed I guess??” wrote one.
“Wow - DJT continuously dropping. Where are you @DevinNunes??,” wrote another.
“I feel pretty retarded ATM…guess I thought winning the Presidency would have more of a long-term effect, not just one day in the pre-market,” wrote a third.
The answer is probably more prosaic. Traders bought up DJT to make short-term gains ahead of the election, then dumped the shares when the demand started to peter out. And ever since November 5, the price of bitcoin has gone past $90,000, and broad indexes like the S&P 500 have reached new highs. There are simply not enough people out there who would want to take the risk and buy Trump’s company when other things could more immediately make them money. And on a fundamental level, it’s a company that isn’t much of a business. Truth Social is not a site many people spend time on — it sees about 200,000 on any given day. When you log on, you’re likely to be bombarded with ads for ivermectin, the quack treatment for COVID, which means that it is still not bringing in high-paying advertisers.
Of course, DJT is a certified memestock, so those drawbacks don’t necessarily apply. On Friday, shares rose about 3.8 percent, DJT’s first up day all week, though it’s hard to really suss out why. The company could go up to a zillion dollars tomorrow and there wouldn’t have to be a reason why.
