Since its debut in March 2024 through a merger with Digital World Acquisition Corp, the parent company of Truth Social (Nasdaq: DJT) has seen its stock soar and plummet along with the election prospects of President Trump, the majority owner of Trump Media & Technology. The stock price reached a high of nearly $80 before dropping all the way to $11 after the lockup period for early investors ended.
Over the past week, DJT shares saw a remarkable rebound to $16 as short sellers covered positions while supporters cited voter polls that showed resilient support for the Trump-Vance ticket.
From a business perspective, the fundamentals of Trump Media remain weak with the social media platform expected to generate less than $10 million in annual revenues. Most analysts are bearish and consider the company’s $3.2 billion market capitalization unsustainable unless sales increase significantly. Nonetheless, a segment of Trump supporters have conflated the investment as a buy-and-hold litmus test for loyalty to the Trump brand.
Proponents of the stock cite the potential for the Trump Media to develop streaming services and a portfolio of OTT channels, documentaries, and talk shows by leveraging its robust balance sheet of over $300 million in cash with no debt. A strong liquidity position gives the company plenty of time to create new offerings to build an audience. Donald Trump promising not to sell his stock has also provided a boost in confidence. Finally, speculators are drawn to the possibility that a private equity firm or another social media platform like X (formerly Twitter) can come along to acquire the company.
