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DWAC surged 35% during Election 2024: Boon or bane？
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Invest With Cici joined discussion · Mar 28 04:31

News Decoding: Dispelling the Fog Around Trump Media & Technology Group

The social media company, Trump Media & Technology Group, launched by former U.S. President Donald Trump, has caused a frenzy on Wall Street, highlighting the controversial figure's substantial influence. 🔥🔥
On Tuesday, Trump Media & Technology Group (TMTG), Now the stock ticker $Trump Media & Technology (DJT.US)$, debuted on the Nasdaq through a SPAC (Special Purpose Acquisition Company) merger, and in just two days, its market value soared to over $7 billion.
30-minute stock price chart
30-minute stock price chart
Remarkably, this is for a company that reported less than $3.5 million in revenue for the first three quarters of the previous year and had losses more than ten times its revenue. SEC filings revealed that Trump owns a 69% stake, indicating a relatively small number of shares available for trading, which potentially makes it easier for the stock to be manipulated. According to the SPAC merger terms, Trump cannot sell his shares for six months, although this restriction can be waived by the company's board.
Wall Street's current valuation of DJI has reached $11 billion, suggesting room for further growth from its current market cap. However, financial analysts candidly attribute this valuation more to sentiment than to rational analysis.
From a fundamental perspective, DJI's losses continue to grow, and its flagship product, Truth Social, is attracting fewer customers, indicating the company is in a constant state of burning through cash. Some academic experts believe that DJI's stock is worth only about $2, significantly lower than its closing price of $66 on Wednesday. The stock's valuation is almost entirely disconnected from the underlying business, much like the meme stocks of GameStop and AMC, which are valued more for their speculative appeal than their business fundamentals.
What are Meme stocks, can check this article we've ever taught.
News Decoding: Dispelling the Fog Around Trump Media & Technology Group
Nonetheless, the more detached the valuation becomes from the company’s financials, the more brazen speculators seem to get.
While it's widely recognized that the bubble surrounding meme stocks will eventually burst, the process could last a while, leading many to join in, fueling a speculative frenzy akin to a game of hot potato.🥶
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more
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