Analysis: Trump's Wealth Decline Amid Truth Social Stock Drop

Shares of Trump Media & Technology Group are continuing to decline quickly. The owner of Truth Social saw a further 10% drop on Monday, making it a tough week with a total loss of one-third of the stock's value.

Former President Donald Trump's stake in the controversial company has decreased to approximately $2.9 billion due to the recent selloff. This is a significant drop from the peak value of $5.2 billion, which was recorded on March 27 when the stock reached a high of $66.22, just a day after its initial public offering.

Trump is the owner of a substantial 78.8 million shares in Trump Media, a company that was established in 2021. The company's original plan to become publicly traded through a merger with a shell company faced multiple delays as a result of regulatory and legal challenges.

Experts cautioned that Wall Street had overvalued Trump Media when it went public. They pointed out that the company's revenue and user numbers did not justify the high valuation.

Trump Media revealed a loss of $58 million last year, with only $4.1 million in revenue. In contrast, Twitter, now known as X, had generated $665 million in revenue in 2013 before its IPO in November of that year.

After just one day on the market, Trump Media was valued at up to $11 billion, which is nearly double the value that Reddit reached after its IPO in March, despite Reddit earning about 200 times more revenue.

Even though there have been some recent losses, the shares of Trump Media and the blank check company it combined with have more than doubled in value this year.

Editor's P/S:

The rapid decline in Trump Media & Technology Group's stock raises concerns about the company's long-term viability. Despite an initial surge in value, the stock's precipitous drop highlights the inherent risks associated with investing in companies with unproven business models and financial instability. The company's heavy reliance on Donald Trump's name and brand recognition raises questions about its ability to attract and retain users beyond his loyal supporters.

Furthermore, the comparison between Trump Media and established social media platforms like Twitter illustrates the stark difference in financial performance and user engagement. While Twitter generated significant revenue before its IPO, Trump Media's limited revenue and substantial losses suggest that its valuation was inflated. The recent selloff may indicate that investors are recognizing the company's overvaluation and the potential risks involved with investing in a venture with limited revenue streams and a niche user base.