After a long-awaited merger, former President Donald Trump’s Trump Media & Technology Group went public with a multibillion-dollar deal last week and a market valuation of $14 billion by Wall Street, but there is a problem.
It has been for the first time in decades that Donald Trump has entered Wall Street eyeing for a start by offering shares of his digital media company — the owner of his social media platform Truth Social.
The shares are being traded under the tick of DJT the initials of Trump with stocks witnessing a 50% surge.
The rise in share prices comes even the Trump Media suffers considerable losses with users pulling out from Truth Social.
Jay Ritter, a finance professor at the University of Florida’s Warrington College of Business, was quoted in CNN: “This is a very unusual situation. The stock is pretty much divorced from fundamentals,” adding that Trump Media is likely worth somewhere around $2 a share — nowhere near its implied stock price of $50.”
He also added: “There is no evidence this is going to become a large, highly profitable company, and 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.”
Under the deal, the former president has control of 79 million shares, with a billion-dollar windfall.
Tuesday’s price of nearly $78 is worth around $6 billion, but due to lock up, the stakeholders cannot offload shares anytime soon.
The total revenue by Trump Media was a mere $3.4 million in the first nine months last year, as per filings and the loss was $49 million.
