As the U.S. election approaches, the Trump trade is once again proving effective.
Written by: Jessy, Golden Finance
As the U.S. election nears, the Trump trade is once again proving effective, directly benefiting Trump's own business empire.
The Trump Media & Technology Group (DJT) has surged over four times since September 24, currently priced at around $51.
Trump holds about 58% of the company, which was established in 2021. Its social product is "Truth Social." The establishment of this company was Trump's response to being banned from several major social platforms in 2021.
It is reported that the daily active user count on Truth Social does not exceed 100,000, and the Trump Media & Technology Group has been operating at a loss since its inception.
The rise in the stock price of the Trump Media & Technology Group is unrelated to the company's operational status, primarily driven by speculative behavior betting on the "Trump trade."
Market value surpasses "X," yet continues to incur losses
The Trump Media & Technology Group was founded in February 2021, rooted in social media, digital streaming, and information technology infrastructure. The company currently has social network product TRUTH Social, video-on-demand product TMTG+, and news media product TMTG News, with plans to launch a solution stack product in the future.
After the January 6, 2021, Capitol riot, Trump's Facebook and Twitter accounts were banned, prompting him to create his own social media platform, leading to the establishment of the Trump Media & Technology Group. Truth Social launched on February 21, 2022.
From a design perspective, Truth Social is very similar to X, and it can be said that Truth Social has copied X.
However, now, with the rise in the stock price of the Trump Media & Technology Group, the market value of Truth Social has surpassed that of X. Currently, the market value of the Trump Media & Technology Group is approximately $10.3 billion, while X's valuation is $9.4 billion (X's market value is based on Fidelity's valuation cited in a disclosure form submitted in September 2024).
However, Truth Social has not disclosed its user data, making it difficult to ascertain the exact number and situation of its users. According to Similarweb data, the company's daily active users were only 76,000 in the first half of this year.
The Trump Media & Technology Group has been operating at a loss since its inception. In Q2 2024, its operating revenue was only $836,900, with a net profit of -$16.368 million. The company's revenue indicates that the current stock price is severely detached from its fundamentals.
Jay Ritter, a finance professor at the University of Florida, stated that there is no evidence to suggest that the Trump Media & Technology Group will become a large, profitable company, and its stock price could even fall to $2 per share or lower.
Trump is the biggest beneficiary
Currently, the stock has seemingly become a "MEME stock," with its price detached from fundamentals and driven by trending events and emotions. As the U.S. election approaches, the stock's popularity is expected to increase.
Not only is the stock of Trump Media & Technology Group rising, but even a software company listed on the A-share market called "Chuan Da Zhi Sheng" has seen its stock price double in the past month. Essentially, both are "MEME stocks" linked to trending and significant events.
Not only supporters of Trump but also retail speculators are buying shares of the Trump Media & Technology Group, and even institutions have purchased the stock this year. Currently, institutional investors hold 10.59% of the company's stock, with most of these institutions completing their positions in the second quarter of this year. In July, Trump was selected as the Democratic presidential candidate, and the actions of institutions reflect the importance of betting on the "Trump trade" in an election year.
The biggest beneficiary of the rising stock price is still Trump himself. As early as 1995, Trump Hotels and Casino Resorts was listed on the NYSE under the ticker "DJT," but the company went bankrupt in 2004 and was delisted. The listing of the Trump Media & Technology Group marks the return of a company controlled by Trump and the "DJT" ticker to Wall Street after nearly 30 years.
Owning a publicly traded company and holding a majority of its shares is undoubtedly an important channel for Trump to monetize.
According to The Wall Street Journal, Trump's overall net worth is between $7.5 billion and $10 billion. Most of Trump's personal net worth is tied to his stake in the Trump Media & Technology Group. As the largest shareholder, Trump owns about 58% of the company, currently valued at around $6 billion.
If Trump were to sell his shares in the Trump Media & Technology Group, the stock would likely experience a significant drop.
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