The proprietor of Truth Social, a social media network, Trump Media & Technology Group, is about to make its first public offering in nearly three decades.
Wall Street has given Trump Media an astounding $9 billion valuation, but experts caution that this amount is unrealistic.
The shell business that will soon become Trump Media, Digital World Acquisition Corporation, has had an almost 200% increase in share price so far this year, with a 35% increase on Monday following the deals closing.
Tuesday’s premarket trading has seen shares rise by an additional 8%.
The stock price is rising even though Trump Media is losing money, burning through cash and its primary platform, Truth Social, is losing users.
According to Jay Ritter, a finance professor at the Warrington College of Business, University of Florida, the stock is largely disconnected from fundamentals.
He stated that Trump Media’s indicated stock price of $50 is not even close to its true value, which is about $2/share.
According to records, Trump Media’s income for the first nine months of last year was a $3.4 million.
Trump Media is valued by the market about $9 billion.
For comparison, Reddit made 160 times more money than Trump Media at its IPO last week, although its valuation was only $6.4 billion.
Senior IPO strategist at Renaissance Capital, Matthew Kennedy referred to Trump Media as a “meme-SPAC,” referencing both the business’s enormous valuation and the fact that it was created by merging with a special purpose acquisition company.
