new York
CNN
—
Former President Donald Trump’s social media company is in a deep, worsening crisis that has wiped out much of his net worth.
Shares of Trump Media & Technology Group (DJT) fell last week to their lowest level since the merger that took the owner of Truth Social public this spring.
Despite a 7% rebound on Monday, Trump Media has lost nearly three-quarters (72%) of its value since its high of $66.22 on March 27.
The sell-off has wiped out significant portions of the wealth of investors, including Trump.
Trump’s controlling stake of 114.75 million shares was worth $6.2 billion on May 9. It has now shrunk to about $2.1 billion – a drastic decline that has pushed Trump out of the Bloomberg Billionaires Index of the world’s 500 richest people.
The total loss reinforces concerns among experts who have repeatedly warned that Trump Media’s billion-dollar price tag defies logic. The company is loss-making, generates very little revenue, and Truth Social remains a relatively small player in social media.
“If this wasn’t Trump, this thing would be trading at $1,” Matthew Tuttle, CEO of Tuttle Capital Management, said in a phone interview with CNN.
In April, billionaire Barry Diller told CNBC that people buying Trump Media stock were “idiots.” In June, LinkedIn co-founder Reid Hoffman told CNN that Trump Media’s value was “absurdly above normal.” Both Diller and Hoffman are major donors to Democrats.
In addition to Trump Media’s weak fundamentals, other factors are likely responsible for the company’s falling share price, analysts say.
Tuttle argues that the fact that Vice President Kamala Harris is neck and neck with Trump in some polls is an important catalyst.
In fact, Trump Media has lost about half its market value since President Joe Biden dropped out on July 21 and endorsed Harris.
“This stock is a pure Trump election play,” Tuttle said. “If Trump wins, this could be a viable company. But if he loses, I don’t know how the company can continue to exist.”
Trump Media did not respond to CNN’s request for comment.
Of course, Trump Media still sits on over $300 million in cash and equivalents – financial firepower that the company could use to make acquisitions and fund its operations.
And although Trump Media only brought in $837,000 in revenue last quarter, the company is building a streaming business aimed at conservatives. In August, Trump Media launched Truth+, a TV streaming platform for iOS, Android and the web versions of Truth Social.
Another shadow hanging over Trump Media is the looming expiration of the lock-up period that prevented Trump and other insiders from selling shares.
According to documents, these restrictions will be lifted as early as September 20. Insiders will then have the opportunity to sell shares if they wish.
However, experts say it will be very difficult for Trump, the company’s majority shareholder, to sell all or even most of his shares without the share price crashing.
It’s possible that Trump Media could see a turnaround in the stock market, especially given the former president’s much-watched debate with Harris on Tuesday.
Nevertheless, Tuttle warned retail investors and even Trump fans to be cautious with this stock and pay attention to the fundamentals.
“I’m a firm believer in separating politics from profit,” he said. “If you’re holding on to it at all costs because you’re a Trump fan, that’s just stupid. You’re investing to make money.”
