The extraordinary stock market rise of Donald Trump’s tiny social media empire was wiped out by a massive sell-off.
Shares of Trump Media & Technology Group, which owns Truth Social, closed below $17 on Wednesday, wiping out all gains since the company’s rapid rise in January.
The former president is prohibited by a lock-up agreement from starting to sell company shares until the end of September. While his majority stake in the company is still worth around $2 billion on paper, its value has fallen dramatically from $4.9 billion in March.
As a company, TMTG is not growing quickly. According to regulatory filings, it generated revenue of just $4.13 million in 2023 and made a loss of $58.2 million.
Truth Social isn’t growing quickly as a platform either. While TMTG doesn’t disclose the size of its user base, research firm Similarweb estimates it had 7.7 million visits in March – while X, formerly Twitter, had 6.1 billion. That same month, however, TMTG was valued at nearly $10 billion on the stock market.
The former president may have to pay hundreds of millions of dollars in penalties following two civil lawsuits, which would eat up a significant portion of his personal wealth. However, Trump Media has previously insisted that there is “no conceivable sign anywhere” that Trump plans to sell shares in TMTG.
After being banned from Twitter and leaving the platform after the ban was lifted, Trump recently returned to X. He gave a long interview on the platform with its owner Elon Musk.
TMTG’s short-lived run in the market was due to its transformation into a so-called “meme stock,” joining a small group of stocks, most notably video game retailer GameStop, that have rocked Wall Street with unexpected, volatile price increases.
The shell company Digital World Acquisition Corp. first announced plans to merge with TMTG and take Trump’s young media company public in October 2021. But the process was stalled by a series of legal hurdles.
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Earlier this year, when Trump dominated the Republican primaries and it became clear that TMTG would finally go public, Digital World shares became the center of attention.
Digital World’s trading volume – the number of shares changing hands – grew exponentially. On one day in December, fewer than 100,000 shares were traded; on one day in January, 29.7 million shares were traded.
As with other meme stocks, interest was fueled by a flood of internet memes encouraging retail investors to buy. What was unique about this was that many of the memes were shared on Truth Social: the platform owned by the very company that was trying to take Digital World public.
When Digital World and TMTG finally merged in March, it initially added fuel to the fire. But as GameStop and AMC Entertainment have shown, the highs reached during these rapid rallies usually set the stage for a massive crash.
