Trump Social just went public. It puts ‘all other meme stocks to shame,’ Michael Pachter says

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Donald Trump’s media company, Trump Media & Technology Group, it went public this week. Trump’s social media platform parent company, Truth Social, trades under the DJT brand (also the former president’s initials); Wall Street offers a market value of about $8 billion. As of Wednesday, the stock was trading at about $66 per share.

That’s it the first time it’s been almost 30 years since one of Trump’s businesses went public—by Bloomberg comparison it increased Trump’s net worth by $4 billion. Ironically, this also sends him into the ranks of the Bloomberg Billionaires Index about the first time. Observers also questioned whether Trump would use this additional wealth to cover it up bond of $ 175 million owes to the people’s court decision, but experts are pessimistic about DJT’s future.

Researchers warn that DJT’s performance may not match its long-term effectiveness. Indeed, Michael PachterManaging Director of Equity Research at an asset management company Wedbushcalled a DJT meme stock that “puts all other memes to shame.”

Pachter, who has been reporting on entertainment news for the past 20 years, says there are several red flags for the company, including its relative low cost, lack of liquidity, and low user appeal, which indicate that the stock will be a flop.

Why DJT could be the next meme stock

DJT’s public launch has been a long time coming. Successful but stoned including between Trump Media & Technology Group, the parent company of Social Truthand Opinions of the company Digital World Acquisition Corp.empty company, brought many years ordinary and a criminal cases, to close the extensionand suspension of votes until the end. Although DJT was able to get off the ground, Pachter does not have high hopes for the future performance of the stock, predicting that it will be destroyed like other memes included. GameStop Games and Bed Bath & Beyond.

Pachter defines a meme stock as one “where the calculation is completely separated from its fundamentals,” and its popularity is driven by “a group of commercial people who share their ideas on a message board, not by a group of rational and rational people. It is.”

Other meme archives, such as GameStop Gamesit went up during the pandemic-era retail investor bump because investors have piled in “regardless of the requirements to capitalize on their expectations,” says Pachter. GameStop Games, which closed at $340 per share at the peak of the pandemic in January 2021 from it is destroyedGameStop closed the game at just $50 the following month.

Sales of votes, market caps, and other meme stocks’ valuations show how unstable Trump’s media company is, Pachter says. Wedbush has a sell price on GameStop and a $5.60 price target, he said. Its coins are sold at $13; its market cap is about $4 billion, and it’s selling about $5 billion, “so the valuation isn’t too bad.”

Trump Social, on the other hand, has a to calculate between $6 billion and $7 billion, but it only brings in $5 million. “It trades more than 1,000 times [its] money, while GameStop sells less than once,” says Pachter.

Facts about Social Truth

When DJT made the announcement this week, so did his social media site Truth Social. Although the high trading costs may make investors think that the platform is good, it brought in only $3.4 million in revenue in the first nine months of 2023 and lost about $49 million, according to Axios.

In his speech, Trump is the only president who has ever created a social media network, which he launched in 2022 when he was in office. prohibited from major social media platforms including Facebook and X after Jan. 6. Attack on the US Capitol. His actions Using the platform to organize terrorist attacks on the Capitol building when Congress confirmed the results of the 2020 elections, “was a serious violation” of the Meta rules, according to the media company. His accounts on both platforms have been active restored. Although Trump made a name for himself by creating his own social media platform, so far, it has not taken off like other popular apps.

Not only is Truth Social struggling to make money, but it’s also struggling to get users.

Social networks have fewer users and less revenue than other social networks it has gone public already-with its users, especially MAGA supporters, it doesn’t appeal to anyone. Indeed, according to 2022 Pew Research Center learning that he investigated 200 popular accounts On the platform, nearly half of Public Truth’s accounts had positive or pro-Trump comments on their profiles — higher than any other social media platform.

Truth Social’s user growth is not going well for several other websites. Social reality does not generate valid numbers, which is unusual for a public company. But according to comparison, there are about 5 million people who visit this site every month. In comparison, X (formerly Twitter) is close 550 million monthly users when Snapchat he is about 800 million monthly users.

While there aren’t any “very profitable ones,” says Pachter, “at least there are users who can justify” the high prices and high business returns. In order to justify its high valuation, he thinks that Truth Social would need at least 200 million users. Since users are currently overwhelmingly Trump supporters, the platform will have trouble gaining more followers.

“Truth Social hasn’t attracted users outside of MAGA,” says Pachter. Other social media platforms, such as Snapchat, “appeal to almost everyone under the age of 30, so they have 2 to 3 billion people.” Truth Social’s biggest potential market, he estimates, is “the 75 million people who like Trump.”

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