In a week marked by turmoil, Trump Media shares plummeted nearly 20%, wiping out billions in market capitalization. The stock, symbolized as DJT, experienced a rollercoaster ride, dropping over 47% in April alone.
The company’s flagship app, Truth Social, backed by former President Donald Trump, debuted with a bang, reaching a high of nearly $80 per share on March 26. However, by the end of the week, shares closed at $32.59, a far cry from its initial offering price.
The steep decline comes amidst Trump’s legal woes, with jury selection for his criminal trial set to begin. The trial revolves around charges of falsifying business records related to a 2016 hush money payment to Stormy Daniels.
Despite the rocky start, Trump remains optimistic, touting Truth Social’s resilience and emphasizing its debt-free status with over $200 million in cash reserves. The app, launched following Trump’s ban from Twitter, has become a platform for the former president to share his views and rally his supporters.
However, critics, including billionaire Barry Diller, have labeled Trump Media a “scam,” cautioning investors against its inflated valuation. The company reported meager revenue of $4.1 million in 2023, leading to skepticism about its billion-dollar valuation.
Short sellers have also taken an interest in DJT, with short interest totaling $208.7 million. However, financing costs for short trades have fallen from a peak of 900% to 200%, indicating a shift in market sentiment.
Despite recent losses, Trump Media’s stock is still up over 74% for the year, thanks in part to its merger with Digital World Acquisition Corp. The company’s resilience in the face of challenges underscores its appeal to investors, albeit with caution.
As Trump Media navigates legal challenges and market pressures, its future remains uncertain. The stock’s performance serves as a cautionary tale for investors, highlighting the volatile nature of the market and the importance of due diligence.