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Below is the beginning of the NYT article on the new stock. I’m afraid a lot of small investors are going to get hurt. This could end up being Trump’s biggest scam ever. Of course some are predicting that if Trump becomes president foreign governments, wealthy individuals, companies, etc that want something from the government will just buy huge numbers of ads which would drive up the sales.
With a price-to-sales ratio of 2000 when other social media companies trade for a ratio of 10 or less so far it doesn’t look good:
Former President Donald J. Trump’s social media company jumped on its first day of trading on the Nasdaq on Tuesday, giving the company an estimated market value of close to $8 billion, larger than established corporations like Mattel, Alaska Airlines and Western Union.
The biggest beneficiary of the market action has been Mr. Trump, who owns about 60 percent of Trump Media, making him the largest shareholder. His stake in the company — the parent of Truth Social, the online platform that is Mr. Trump’s main megaphone for reaching supporters and attacking critics — is worth about $4.6 billion on paper.
For many investors, investing is as much as a sign of support for Mr. Trump personally as it is for his relatively small, loss-making social media company, which describes itself as a platform that stands against censorship by Big Tech. Such was the frenzy on Tuesday that trading in Trump Media’s shares was briefly halted by the stock exchange shortly after it opened because of extreme volatility. After gaining as much as 40 percent, the stock eased toward the close, ending the day 16 percent higher.
Trump Media closed its merger with Digital World Acquisition Corporation, a cash-rich public shell company, on Monday.
We do appreciate President Trump but it’s more about free speech,” said Mark Willis, 63, who lives in Indian Trail, N.C. and has been buying shares in the public shell company that merged with Trump Media ever since the merger plan was proposed in 2021. “We believe this is the only social media platform that is not heavily influenced by the government.”
Scott Lewczak, a graphic designer in Nokesville, Va., and another longtime shareholder, said he is going to make money on the big surge in the price of Trump Media, but that is not the point. He said his investment was to support Truth Social and Mr. Trump.
“Even if I lose every penny, I will fight to the end,” Mr. Lewczak said.
The investors who have piled into the stock of Digital World, and now Trump Media, have tended to be individuals, rather than investment firms and hedge funds.
By most traditional measures, Trump Media’s valuation is inordinately high. The company took in just $3.3 million in revenue during the first nine months of last year, all from advertising on Truth Social, and recorded a loss of $49 million.
That means Trump Media’s market value is nearly 2,000 times its estimated annual revenue. Investors sometimes assign lofty valuations to small, loss-making companies in anticipation of rapid growth — or a belief that other investors will continue to bid up a company’s shares, for whatever reason — but typically not on this scale.
Other social media companies trade at far smaller price-to-sales ratios than Trump Media: Reddit is around 10, Meta is 7 and Snap is 6, according to FactSet. High-flying tech stocks like the chipmakers Nvidia and ARM trade at price-to-sales ratios of about 25.
https://www.nytimes.com/2024/03/26/...ytcore-ios-share&referringSource=articleShare
With a price-to-sales ratio of 2000 when other social media companies trade for a ratio of 10 or less so far it doesn’t look good:
Former President Donald J. Trump’s social media company jumped on its first day of trading on the Nasdaq on Tuesday, giving the company an estimated market value of close to $8 billion, larger than established corporations like Mattel, Alaska Airlines and Western Union.
The biggest beneficiary of the market action has been Mr. Trump, who owns about 60 percent of Trump Media, making him the largest shareholder. His stake in the company — the parent of Truth Social, the online platform that is Mr. Trump’s main megaphone for reaching supporters and attacking critics — is worth about $4.6 billion on paper.
For many investors, investing is as much as a sign of support for Mr. Trump personally as it is for his relatively small, loss-making social media company, which describes itself as a platform that stands against censorship by Big Tech. Such was the frenzy on Tuesday that trading in Trump Media’s shares was briefly halted by the stock exchange shortly after it opened because of extreme volatility. After gaining as much as 40 percent, the stock eased toward the close, ending the day 16 percent higher.
Trump Media closed its merger with Digital World Acquisition Corporation, a cash-rich public shell company, on Monday.
We do appreciate President Trump but it’s more about free speech,” said Mark Willis, 63, who lives in Indian Trail, N.C. and has been buying shares in the public shell company that merged with Trump Media ever since the merger plan was proposed in 2021. “We believe this is the only social media platform that is not heavily influenced by the government.”
Scott Lewczak, a graphic designer in Nokesville, Va., and another longtime shareholder, said he is going to make money on the big surge in the price of Trump Media, but that is not the point. He said his investment was to support Truth Social and Mr. Trump.
“Even if I lose every penny, I will fight to the end,” Mr. Lewczak said.
The investors who have piled into the stock of Digital World, and now Trump Media, have tended to be individuals, rather than investment firms and hedge funds.
By most traditional measures, Trump Media’s valuation is inordinately high. The company took in just $3.3 million in revenue during the first nine months of last year, all from advertising on Truth Social, and recorded a loss of $49 million.
That means Trump Media’s market value is nearly 2,000 times its estimated annual revenue. Investors sometimes assign lofty valuations to small, loss-making companies in anticipation of rapid growth — or a belief that other investors will continue to bid up a company’s shares, for whatever reason — but typically not on this scale.
Other social media companies trade at far smaller price-to-sales ratios than Trump Media: Reddit is around 10, Meta is 7 and Snap is 6, according to FactSet. High-flying tech stocks like the chipmakers Nvidia and ARM trade at price-to-sales ratios of about 25.
https://www.nytimes.com/2024/03/26/...ytcore-ios-share&referringSource=articleShare
