The Memorable Moment: Trump's Wall Street Comeback and the Meme Madness
As Donald Trump gears up for a potential return to Wall Street, the meme-trading frenzy around the former president is reaching new heights. Anticipation is building as Trump's comeback sparks a frenzy reminiscent of meme culture, creating a buzz in the financial world.
Donald Trump is closer than ever to returning to Wall Street, which has increased the excitement around meme-trading involving the former president.
Shareholders of Trump Media, the company behind Trump's social media platform, Truth Social, voted on Friday to merge with Digital World Acquisition Corp. This company is a blank-check company that helps private companies raise funds and go public.
Shares of DWAC surged over 100% this year in anticipation of its merger with Trump Media. The trading frenzy mirrored the excitement seen with Tupperware, AMC Entertainment, and GameStop during the pandemic.
However, Trump Media reported a $26 million loss in the third quarter of last year, leading many experts to question whether it is a wise investment or potentially overvalued.
"The stock price is definitely overinflated," stated Yale law professor Jonathan Macey in an interview with CNN. He emphasized that it would not be wise for any sensible investor to blindly accept the stock's value, especially if they plan to hold onto it for an extended period.
During midday on Friday, the shares of DWAC were seen to be unstable and eventually dropped by 3.5%.
DWAC and Trump Media did not immediately respond to CNN’s request for comment.
What is a meme stock?
Meme stocks are known for their dedicated online fan base and extreme fluctuations in value. The trend started with GameStop, a struggling company whose stock was targeted by investors on platforms like Reddit in 2021. These investors aimed to drive up the stock price to hurt hedge funds and other big financial players who were betting on GameStop's stock to drop. This tactic is called short-selling, where investors borrow shares, sell them, buy them back at a lower price, and keep the profit when returning the shares.
Republican presidential candidate former President Donald Trump speaks at a campaign rally Saturday, March 9, 2024, in Rome Ga.
Republican presidential candidate former President Donald Trump speaks at a campaign rally Saturday, March 9, 2024, in Rome Ga.
Mike Stewart/AP
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On Truth Social, there is a chat group called “The DWAC Shareholder Group” with over 8,000 members. In this group, users talk about the vote, share memes, and show support for each other.
At the top of the chat, there are rules that members must follow. These rules prohibit promoting short-selling and encourage users to back up their opinions or recommendations with evidence like public filings. The group is focused on discussions about the new company, which will be known as Trump Media & Technology Group.
"We want to avoid any accusations of stock pumping or deceiving investors," one rule mentions.
Separately, Trump has until Monday to come up with a $464 million bond in a civil fraud case. If he fails to pay, the New York attorney general's office could take possession of his golf course and private estate north of Manhattan, or other assets.
Trump is in need of money, as indicated by his financial situation. If the merger gets the green light, he would have a significant ownership in his company, holding shares valued at over $3 billion. However, this may not resolve his financial difficulties. Shareholders of Trump Media, such as the management team, have agreed to hold onto their common stock for six months after the merger, in order to ensure stability in leadership and governance, as stated in SEC filings.
CNN’s Matt Egan helped with this report.
Editor's P/S:
The return of Donald Trump to Wall Street has sparked a surge in meme-trading, evoking memories of the GameStop frenzy. The merger of Trump Media with DWAC has fueled excitement among investors, but experts caution against overvaluation. The company's financial losses raise concerns about its long-term viability.
Meanwhile, Trump faces a looming bond payment deadline, leaving him in need of funds. The potential $3 billion windfall from the merger could provide some relief, but it may not fully resolve his financial woes. Additionally, the restrictions on stock sales by shareholders after the merger raise questions about the liquidity of Trump's holdings. The situation highlights the volatility and potential risks associated with meme-trading and the unique challenges facing the former president in his financial endeavors. online communities in the rise of meme stocks. The group's rules aim to prevent stock pumping and encourage informed discussions. However, it is essential to approach such online forums with skepticism and seek professional advice before making investment decisions. Meme stocks often exhibit extreme volatility and can lead to substantial losses for investors who are not prepared for the risks involved.
