This week, former President Donald Trump’s social media company began trading on Wall Street, and investors have been quick to buy and sell, with prices fluctuating but closing up 16% on its first day.
Trump Media & Technology Group (DJT), the company that operates Truth Social, shot up by over 50% on Tuesday, the stock’s first day on the market, hitting as high as $77 a share.
During its second day, the stock stayed more stagnant, sitting around $66 a share, still up from its opening.
Overall, the stock has risen more than 230% since the beginning of the year in anticipation of Trump’s company merging with SPAC Digital World Acquisition Corp and going public.
The company officially going public comes as Trump is facing numerous criminal charges, a campaign for the White House, and a mounting legal bill, currently totaling more than $500 million.
Still, the jump in Trump’s stock has helped his financial standing, as the company now has a market capitalization of $7.85 billion, which has effectively tripled Trump’s net worth on paper, MarketWatch shared.
However, not everyone is sure that Trump’s media company will continue at such strong numbers, as some say the company’s weak fundamentals need to be considered.
Currently, Truth Social has only posted $5 million in sales since it was launched in 2021 while recording tens of millions of dollars in losses. The site has about 5 million members, which isn’t much compared to X, which boasts more than 500 million monthly users.
“This is a very unusual situation. The stock is pretty much divorced from fundamentals,” Jay Ritter, a professor of finance at the University of Florida and an expert in IPOs, shared with CNN.
Because of this and other factors, Ritter has gone as far as to call it a “meme stock.”
“This is a supercharged meme stock,” Ritter shared with MarketWatch. “Its market price is entirely divorced from fundamentals, but unlike what we saw with meme stocks like GameStop or AMC, the motivations of its investors seem to be different.”
When it comes to comparisons, Ritter says that what was seen during the pandemic with both GameStop and AMC is the closest thing to what is happening now, but he said he wouldn’t price the stock at more than a couple of dollars a share right now.
“The underlying business doesn’t seem to be worth much. There is no evidence this is going to become a large, highly profitable company,” he told CNN. “I’m reasonably confident the stock price will eventually drop to $2 a share and could even go below that if the company blows through the money it got from the merger.”