The recent downturn in shares of Trump Media & Technology Group has been both sharp and rapid, with the owner of Truth Social experiencing yet another 8% decline in its stock price on Monday. This decline adds to what has been a particularly rough week for the company, during which its market value plummeted by a staggering one-third. As a result, the stake held by former President Donald Trump in the company has significantly diminished, now standing at approximately $2.9 billion. This represents a stark drop from its peak valuation of $5.2 billion shortly after the company went public.
Trump’s ownership in Trump Media is substantial, with him holding a dominant stake of 78.8 million shares. The journey of Trump Media towards going public has been fraught with obstacles, including regulatory and legal challenges that led to significant delays in its merger with a shell company.
Despite high expectations surrounding its initial public offering, industry experts were quick to warn that Wall Street may have overestimated the true value of Trump Media. This caution was driven by the company’s relatively modest revenue and user base. Last week, Trump Media disclosed a staggering loss of $58 million in the preceding year, coupled with meager revenue of just $4.1 million. This stands in stark contrast to industry giants like Twitter (now known as X), which generated over 100 times as much revenue in the year preceding its IPO.
Following its public debut, Trump Media’s valuation soared to unprecedented heights, reaching as high as $11 billion after its first day of trading. This valuation discrepancy becomes even more apparent when compared to other tech companies like Reddit, which achieved a lower valuation despite boasting significantly higher revenue figures.
Despite the recent setbacks, shares of Trump Media, as well as the blank check company it merged with, have experienced remarkable growth this year, more than doubling in value. However, this volatility underscores the speculative nature of the market’s perception of the company’s prospects and highlights the challenges it faces in delivering sustainable growth and profitability within the fiercely competitive social media landscape.