The recent surge in Trump Media & Technology Group (TMTG) stock, driven by meme-stock enthusiasts, marks a remarkable development in the landscape of both social media and financial markets. TMTG, the parent company of Truth Social—an eagerly anticipated social media platform championed by former President Donald Trump—has experienced an extraordinary surge in its valuation, surpassing $13 billion on a fully diluted basis. This surge has positioned TMTG ahead of several established S&P 500 companies, including stalwarts like American Airlines, Ralph Lauren, and Campbell Soup.
The enthusiasm surrounding TMTG mirrors the frenzy witnessed during the heyday of meme stocks, with retail investors propelling the company’s stock price to unprecedented heights. Following the completion of a SPAC merger on Monday, TMTG commenced trading under the ticker symbol DJT on Tuesday, with its stock price surging nearly 80% over the next three trading days to surpass $66 per share. This surge has propelled TMTG’s market capitalization to $9 billion, an impressive feat for a newly merged entity.
Donald Trump’s substantial ownership stake in TMTG further fuels the excitement surrounding the company. With Trump holding 78.75 million shares, equivalent to at least 58% ownership, the former president’s net worth has seen a significant boost, estimated to have increased by approximately $4.7 billion this year alone, according to the Bloomberg Billionaires Index. Trump’s association with TMTG undoubtedly adds to its allure among investors and supporters alike.
The surge in TMTG’s stock price has attracted significant attention from retail investors, reminiscent of the fervor witnessed with meme stocks such as GameStop and AMC Entertainment in 2021. Retail investors poured $6.5 million into TMTG stock on Tuesday alone, triple the net inflow of the previous day. Additionally, discussions surrounding TMTG stock have gained traction on platforms like the r/WallStreetBets subreddit, known for its role in fueling meme stock movements.
While the surge in TMTG’s stock price may be attributed to a variety of factors, including strong support from Trump’s fanbase, speculative trading, and FOMO among retail investors, it’s essential to acknowledge the aggressive valuation of the company. With a market value exceeding 2,600 times its revenue of $3.4 million generated in the first nine months of 2023 and a net loss of $49 million during that period, TMTG’s valuation appears to be disconnected from its financial fundamentals.
As the meme-stock frenzy continues to unfold, the trajectory of TMTG’s stock price and its implications for the broader market remain uncertain. However, the unprecedented surge in valuation underscores the power of retail investors and the evolving dynamics of social media-driven investment trends in today’s financial markets.