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Small time investors on Trump's Truth Social reckon with stock collapse.
- Thread starter odanny
- Start date
odanny
Diamond Member
- Thread starter
- #162
Fascinating to watch:
Former President Donald Trump is on the cusp of scoring a major financial bonanza – at least on paper.
As long as Trump Media & Technology Group’s share price doesn’t spectacularly implode before Tuesday’s closing bell, Trump is on track to receive another 36 million shares as the owner of Truth Social.
This milestone is on track to be hit after the market closes on Tuesday.
Even though Trump Media is losing money and Truth Social is very tiny, those new shares Trump is in line to receive would be valued at about $1.3 billion at current prices.
Trump’s net worth has been on a roller coaster ride ever since his social media company finalized its deal to go public late last month. The former president is the dominant shareholder in a stock that has been called a “meme stock on steroids.”
Although Trump Media’s share price has been cut in half since peaking on March 27, it’s still trading comfortably above levels that would trigger certain performance provisions in the merger agreement.
According to SEC filings, Trump Media can issue additional shares to pre-merger shareholders such as the former president if the dollar volume-weighted average price equals or exceeds $12.50 for any 20 trading days within any 30 day trading period beginning on March 25.
The full earnout of 40 million shares would be triggered if that price metric equals or exceeds $17.50 over the same timeframe.
Tuesday marks the 20th trading day and Trump Media’s share price has not traded below the $17.50 level at any point since the clock started on March 25.
“It seems almost certain to me that the earnout conditions will be satisfied at this point, given how high the share price has been,” said Michael Ohlrogge, an associate professor at the NYU School of Law.
That would give Trump an even more dominant stake of 114.75 million shares, amounting to 65% of the total outstanding shares, according to filings.
Of course, Trump Media’s share price is subject to extreme volatility, meaning the value of this stake can swing wildly.
There are also practical and legal restrictions that would likely prevent Trump from cashing in this stock anytime soon.
According to filings, the earnout shares Trump appears to be in line to receive are subject to the lock-up restrictions that prevent insiders from selling or borrowing against their stock for months after the merger closed.
Even if Trump was able to get around this lock-up agreement, experts say it would be practically difficult for him to sell a sizable chunk of his stake without causing a crash in the share price. After all, Trump is the largest shareholder, chairman and most popular user on Truth Social.
One common way to value stocks is to compare its price relative to its revenue.
The average social media stock trades at a price-to-sales ratio of roughly 10x, according to Matthew Kennedy, senior IPO strategist at Renaissance Capital. That peer group includes Facebook owner Meta, Pinterest, Snap, Reddit and Rumble.
By comparison, Trump Media is trading at north of 1,200 times sales, according to Kennedy.
“The stock appears to be grossly overvalued,” said Jay Ritter, a finance professor at the University of Florida.
Ritter, who has been studying IPOs for four decades, expects Trump Media’s share price to eventually plunge to just $1 or $2 per share.
For instance, Ohlrogge pointed to how the stock plunged last week after the company indicated it plans to register new shares.
“There should have been nothing surprising about that filing since it was just doing precisely what the company said it would do after it went public…There was no real rational reason to have a negative impact on the price,” he said, adding that the price reflects the “whims and sentiments of very uninformed traders, driving the price this way and that.”
In a sign that Trump Media is worried about its share price, the company took the unusual step last week of telling its shareholders how to avoid their stock from being loaned to short sellers betting against it.
Trump Media updated a FAQ section on its website to include the short-selling prevention tips.
“That is highly unusual,” said Peter Byrne, a securities lawyer at Cooley who focuses on companies going public. “We don’t typically see companies publish information like this.”
www.yahoo.com
Former President Donald Trump is on the cusp of scoring a major financial bonanza – at least on paper.
As long as Trump Media & Technology Group’s share price doesn’t spectacularly implode before Tuesday’s closing bell, Trump is on track to receive another 36 million shares as the owner of Truth Social.
This milestone is on track to be hit after the market closes on Tuesday.
Even though Trump Media is losing money and Truth Social is very tiny, those new shares Trump is in line to receive would be valued at about $1.3 billion at current prices.
Trump’s net worth has been on a roller coaster ride ever since his social media company finalized its deal to go public late last month. The former president is the dominant shareholder in a stock that has been called a “meme stock on steroids.”
Although Trump Media’s share price has been cut in half since peaking on March 27, it’s still trading comfortably above levels that would trigger certain performance provisions in the merger agreement.
According to SEC filings, Trump Media can issue additional shares to pre-merger shareholders such as the former president if the dollar volume-weighted average price equals or exceeds $12.50 for any 20 trading days within any 30 day trading period beginning on March 25.
The full earnout of 40 million shares would be triggered if that price metric equals or exceeds $17.50 over the same timeframe.
Tuesday marks the 20th trading day and Trump Media’s share price has not traded below the $17.50 level at any point since the clock started on March 25.
“It seems almost certain to me that the earnout conditions will be satisfied at this point, given how high the share price has been,” said Michael Ohlrogge, an associate professor at the NYU School of Law.
Trump’s dominant stake
The merger agreement calls for Trump to receive 90% of those earnout shares, translating to 36 million additional shares.That would give Trump an even more dominant stake of 114.75 million shares, amounting to 65% of the total outstanding shares, according to filings.
Of course, Trump Media’s share price is subject to extreme volatility, meaning the value of this stake can swing wildly.
There are also practical and legal restrictions that would likely prevent Trump from cashing in this stock anytime soon.
According to filings, the earnout shares Trump appears to be in line to receive are subject to the lock-up restrictions that prevent insiders from selling or borrowing against their stock for months after the merger closed.
Even if Trump was able to get around this lock-up agreement, experts say it would be practically difficult for him to sell a sizable chunk of his stake without causing a crash in the share price. After all, Trump is the largest shareholder, chairman and most popular user on Truth Social.
‘Grossly overvalued’
Even though Trump Media’s share price has retreated since spiking to $66 last month, experts warn it remains overvalued based on fundamental metrics.One common way to value stocks is to compare its price relative to its revenue.
The average social media stock trades at a price-to-sales ratio of roughly 10x, according to Matthew Kennedy, senior IPO strategist at Renaissance Capital. That peer group includes Facebook owner Meta, Pinterest, Snap, Reddit and Rumble.
By comparison, Trump Media is trading at north of 1,200 times sales, according to Kennedy.
“The stock appears to be grossly overvalued,” said Jay Ritter, a finance professor at the University of Florida.
Ritter, who has been studying IPOs for four decades, expects Trump Media’s share price to eventually plunge to just $1 or $2 per share.
Trump Media gives short-selling prevention tips
Ohlrogge, the NYU professor, said Trump Media’s share price is “responding primarily to non-rational factors.”For instance, Ohlrogge pointed to how the stock plunged last week after the company indicated it plans to register new shares.
“There should have been nothing surprising about that filing since it was just doing precisely what the company said it would do after it went public…There was no real rational reason to have a negative impact on the price,” he said, adding that the price reflects the “whims and sentiments of very uninformed traders, driving the price this way and that.”
In a sign that Trump Media is worried about its share price, the company took the unusual step last week of telling its shareholders how to avoid their stock from being loaned to short sellers betting against it.
Trump Media updated a FAQ section on its website to include the short-selling prevention tips.
“That is highly unusual,” said Peter Byrne, a securities lawyer at Cooley who focuses on companies going public. “We don’t typically see companies publish information like this.”
Donald Trump is on the verge of another $1 billion Truth Social windfall
Former President Donald Trump is on the cusp of scoring a major financial bonanza – at least on paper.
- Jun 29, 2013
- 22,725
- 14,985
- 1,405
Meh.... That's what they all said about Bitcoin when it started.Most of these folks are trusting and hard working, and don't even see it coming. Blind faith never ends well.
Jerry Dean McLain first bet on former president Donald Trump’s Truth Social two years ago, buying into the Trump company’s planned merger partner, Digital World Acquisition, at $90 a share. Over time, as the price changed, he kept buying, amassing hundreds of shares for $25,000 — pretty much his “whole nest egg,” he said.
That nest egg has lost about half its value in the past two weeks as Trump Media & Technology Group’s share price dropped from $66 after its public debut last month to $32 on Friday. But McLain, 71, who owns a tree-removal service outside Oklahoma City, said he’s not worried. If anything, he wants to buy more.
“I know good and well it’s in Trump’s hands, and he’s got plans,” he said. “I have no doubt it’s going to explode sometime.”
For shareholders like McLain, investing in Truth Social is less a business calculation than a statement of faith in the former president and the business traded under his initials, DJT.
Even the company’s plunging stock price — and the chance their investments could get mostly wiped out — doesn’t seem to have shaken that faith. The company has lost $3.5 billion in value since its public debut last month.
As a business, Trump Media has largely underwhelmed: The company lost $58 million last year on $4 million in revenue, less than the average Chick-fil-A franchise, even as it paid out millions in executive salaries, bonuses and stock.
And in two years, Truth Social has attracted a tiny fraction of the traffic other platforms see, according to estimates from the analytics firm Similarweb — one of the only ways to measure its performance, given that the company says it “does not currently, and may never, collect, monitor or report certain key operating metrics used by companies in similar industries.”
But for some Trump investors, the stock is a badge of honor — a way to show their devotion beyond buying Trump merchandise, visiting Trump golf courses or donating to Trump’s presidential campaign.
- Jan 19, 2010
- 67,793
- 62,177
- 3,605
At your house I can imagine you would go with that...If I may offer a better, safer investment. It's Vaseline. Seriously.
Truth Social has blown away all of the predictions of never being able to get off the ground... so keep on moving that goal post Trump haters....
Truth social has proven you all wrong and it will continue to do so...
- Jun 29, 2013
- 22,725
- 14,985
- 1,405
Investment comes in many formsMeh....you're comparing apples to washing machines.
/——/ Trump poised to clinch $1.3 billion stock award from social-media companyMeh....you're comparing apples to washing machines.
- Feb 22, 2017
- 104,598
- 35,300
- 2,290
At your house I can imagine you would go with that...
Truth Social has blown away all of the predictions of never being able to get off the ground... so keep on moving that goal post Trump haters....
Truth social has proven you all wrong and it will continue to do so...
Truth Social is static at best. It has a mere 2 million active users and that number is basically unchanged in a year.
In order to make money TS needs to reach upwards of 30 million active users, that will never happen.
- Feb 22, 2017
- 104,598
- 35,300
- 2,290
If only he could sell he might actually see that amount.
- Jan 19, 2010
- 67,793
- 62,177
- 3,605
It took years for twitter to take off competing with facebook and myspace.... Truth social is just fine and still growing....Truth Social is static at best. It has a mere 2 million active users and that number is basically unchanged in a year.
In order to make money TS needs to reach upwards of 30 million active users, that will never happen.
- Feb 22, 2017
- 104,598
- 35,300
- 2,290
It took years for twitter to take off competing with facebook and myspace.... Truth social is just fine and still growing....
It is not growing, that is the whole point. According to Axios they only have 1 million daily users now, compared to 2 in 2023.
Twitter had 40 millions users in its first year, up to 151 in its 3rd year.
- Jan 19, 2010
- 67,793
- 62,177
- 3,605
Axios is obviously wrong.... or more likely lying...It is not growing, that is the whole point. According to Axios they only have 1 million daily users now, compared to 2 in 2023.
Twitter had 40 millions users in its first year, up to 151 in its 3rd year.
Truth Social Has an Edge as Rival Right-Wing Apps Falter
Donald Trump’s social media platform has outdistanced similar conservative sites such as Parler and Gettr, even as it lags far behind X and others.
Trump social media company Truth Social surges in Nasdaq debut
Shares of Donald Trump’s social media company jumped more than 30% in the first day of trading on the Nasdaq, boosting the value of Trump's large holdings in the company as well as the smaller stakes…
www.france24.com
- Feb 22, 2017
- 104,598
- 35,300
- 2,290
Axios is obviously wrong.... or more likely lying...
Truth Social Has an Edge as Rival Right-Wing Apps Falter
Donald Trump’s social media platform has outdistanced similar conservative sites such as Parler and Gettr, even as it lags far behind X and others.www.nytimes.com
Trump social media company Truth Social surges in Nasdaq debut
Shares of Donald Trump’s social media company jumped more than 30% in the first day of trading on the Nasdaq, boosting the value of Trump's large holdings in the company as well as the smaller stakes…
Data aggregator SimilarWeb estimated their number of visitors per month at 5 million in February 2024 and the number of active users in the U.S. at 1 million per month. On March 25, 2024, the day TMTG's stock began trading publicly, Truth Social had 277,000 U.S. visitors, while Reddit had 32 million.
Truth Social - Wikipedia
- Jan 19, 2010
- 67,793
- 62,177
- 3,605
They are lying to you.... how could it go down with Trump in the global news as he is today... it doesn't make any sense... how could his stock value be blowing away all estimates if people were not joining the app?... give me a break....Data aggregator SimilarWeb estimated their number of visitors per month at 5 million in February 2024 and the number of active users in the U.S. at 1 million per month. On March 25, 2024, the day TMTG's stock began trading publicly, Truth Social had 277,000 U.S. visitors, while Reddit had 32 million.
Truth Social - Wikipedia
en.wikipedia.org
- Feb 22, 2017
- 104,598
- 35,300
- 2,290
They are lying to you.... how could it go down with Trump in the global news as he is today... it doesn't make any sense... how could his stock value be blowing away all estimates if people were not joining the app?... give me a break....
there are only so many Trump worshipers, and they have all joined.
Captain Caveman
Platinum Member
Trump's stake has slumped to $2.2 billion. Give me that anyday of the week!!
Blimey, members here would be happy getting the .2 bit, never mind the two billion, lol.
Blimey, members here would be happy getting the .2 bit, never mind the two billion, lol.
/——/ Maybe if we get you Hunter Biden, Joe Stalin, and Pol Pot worshipers at the DNC to join….there are only so many Trump worshipers, and they have all joined.
CrazyTrader55
Gold Member
<----- Trump supporter here and non-TDS sufferer..... but this stock is garbage and I can't believe anyone bought it - the revenue numbers are putrid and Trump is 77 years old (78 in two more months). Where is the future growth coming from? Do people think Twitter is going to buy this out? Unless you see a buyout from some other company I can't see a reason to invest here.
/——/ Then don’t buy. Problem solved.<----- Trump supporter here and non-TDS sufferer..... but this stock is garbage and I can't believe anyone bought it - the revenue numbers are putrid and Trump is 77 years old (78 in two more months). Where is the future growth coming from? Do people think Twitter is going to buy this out? Unless you see a buyout from some other company I can't see a reason to invest here.
CrazyTrader55
Gold Member
I won't, but you will not keep me from speaking out against it to warn other investors. If you bought it and are trying to pump it....too bad/——/ Then don’t buy. Problem solved.
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