Written by: Jessy, Golden Finance
As the U.S. elections approach, the Trump trade is once again effective, directly benefiting Trump's own business empire.
The Trump Media & Technology Group (DJT) has increased more than four times since September 24, currently priced at about $51.
Trump holds about 58% of the company's shares, which was established in 2021. Its social product is 'Truth Social' (translated as 'Real Social' in Chinese). The establishment of the company was Trump's response to being banned from several major social platforms in 2021.
Reportedly, the daily active user count on Truth Social does not exceed 100,000, and the Trump Media & Technology Group has been in a state of loss since its establishment.
The rise in stock price of the Trump Media & Technology Group is unrelated to the company's operational status, mainly driven by speculative behavior betting on the 'Trump trade'.
Market value exceeds 'X', yet has been continuously losing money.
The Trump Media & Technology Group was established in February 2021 and is a media and technology company rooted in social media, digital streaming, IT infrastructure, and other fields. The company currently has social network product TRUTH Social, video-on-demand product TMTG+, and news media product TMTG News, and plans to launch solution stack products in the future.
After the January 6, 2021, Capitol riot, Trump's Facebook and Twitter accounts were banned, prompting him to create his own social media platform, leading to the establishment of the Trump Media & Technology Group. Truth Social launched on February 21, 2022.
In terms of interface design, Truth Social is very similar to X, and it can be said that Truth Social has copied X.
However, now with the rise in stock price of the Trump Media & Technology Group, the market value of Truth Social has surpassed X. Currently, the market value of Trump Media & Technology Group is about $10.3 billion, while X's valuation is $9.4 billion (X's market value is calculated based on the investment value cited in the disclosure form submitted in September 2024).
However, Truth Social has not disclosed its user data, making it difficult to ascertain the exact number and status of its users. According to Similarweb data, the company's daily active users were only 76,000 in the first half of this year.
Since its establishment, the Trump Media & Technology Group has been in a state of loss. In Q2 2024, its operating revenue was only $836,900, with a net profit of -$16.368 million. From the company's revenue, it can also be seen that the current price of the stock is severely detached from the fundamentals.
Jay Littell, a finance professor at the University of Florida, stated that there is no evidence to suggest that the Trump Media & Technology Group will become a large, profitable enterprise, and its stock price could even fall to $2 per share or lower.
Trump is the biggest beneficiary.
However, currently, this stock has clearly become a 'MEME stock', with its price detached from fundamentals, instead driven by hot events and emotions. As the U.S. elections approach, the stock's popularity will only increase.
It's not just the stock of Trump Media & Technology Group that is rising. Even a software company listed on the A-shares called 'Chuan Da Zhi Sheng' has seen its stock double in the past month. Essentially, both are 'MEME stocks' linked to hot topics and key events.
Not only supporters of Trump, but retail speculators are buying Trump Media & Technology Group's stock; even institutions have bought into the stock this year. Currently, institutional investors hold 10.59% of the company's stock, and most of these institutions completed their positions in the second quarter of this year. In July of this year, Trump was selected as the Democratic presidential candidate, and the actions of the institutions also highlighted the importance of betting on the 'Trump trade' in an election year.
The biggest beneficiary of the rise in stock prices is still Trump himself. As early as 1995, the Trump Hotels and Casino Resorts was listed on the NYSE, also under the trading code 'DJT', but the company went bankrupt in 2004 and was delisted. The listing of the Trump Media & Technology Group marks the return of a Trump-controlled company and the 'DJT' trading code to Wall Street after nearly 30 years.
Having a publicly listed company and holding most of its shares is undoubtedly an important channel for Trump to realize profits.
According to the Wall Street Journal, Trump's overall net worth is between $7.5 billion and $10 billion. Most of Trump's personal net worth is related to his holdings in Trump Media & Technology Group. As the largest shareholder, Trump owns about 58% of the company's shares, currently valued at about $6 billion.
If Trump were to sell off his holdings in Trump Media & Technology Group, the stock would also see a significant drop.