Donald Trump’s social network, on the rise in the stock market / Why do analysts not believe in the billions circulated?

Former US President Donald Trump’s media company debuted on the New York Stock Exchange on Tuesday, on the first day of trading under the initials DJT, those of the future Republican presidential candidate, according to AFP.

Shares of DJT, owned by Trump Media and Technology Group (TMTG), the company that owns the social network Truth Social, rose 16.10% to $57.99, although the closing price was much lower than the level reached in during the meeting.

“I love Truth Social, I love the truth,” Donald Trump said of his 2022 network on Tuesday, hailing the success of the Nasdaq stock.

Shortly after the trading session opened on Wall Street, shares of DJT, which are in high demand, were suspended for several minutes before trading resumed.

Valued on paper at around $4.5 billion

On Friday, a general meeting of Digital World Acquisition Corp (DWAC), a listed vehicle intended to carry another company (SPAC), voted in favor of a merger with TMTG, Trump’s company.

Donald Trump is the main shareholder of TMTG, who will control several tens of millions of shares in the newly listed company.

According to several estimates, his stake is valued on paper at around $4.5 billion, given the stock price.

However, several analysts have questioned the soundness of this assessment.

Trump Media generated just $3.4 million in sales for the first nine months of 2023, according to CNN, while its losses totaled $49 million.

By comparison, social network Reddit (up 8.88% to $65.11), which also just went public on Wall Street, had a valuation of more than $9 billion on Tuesday, while its sales amounted to more than 800 million dollars.

Analysts are tempering the enthusiasm

Steve Sosnick, chief strategist at Interactive Brokers (IBKR), believes the stock market’s enthusiasm for these new stocks is similar to the movement that has affected “meme stocks,” the viral stocks that spark speculation among stock traders.

“In DJT’s case, the action is politically motivated,” the analyst pointed out in a note.

“It is not absurd to believe that a large number of followers” of Donald Trump’s MAGA (Make America Great Again) movement “are voting with their wallets for their preferred candidate.”

On paper, however, this initial public offering provides a breath of fresh financial air for Donald Trump, whose finances have been shaken and who is being prosecuted on several fronts.

However, the agreement between TMTG and DWAC includes a six-month lock-up period during which existing shareholders cannot sell their shares on the market.

On Monday, a New York judge eased financial pressure on the Republican presidential candidate by lowering his bail in a civil case to $175 million, but refused to postpone his historic criminal trial, which had been scheduled to begin on April 15 .