Trump Truth Social Shares Headed for a Drop – Business News (Trending Perfect)

There was a statement of the inescapable truth in the first annual report released by the parent company of Donald Trump’s Truth Social platform.

Trump Media and Technology Group issued a report on April 1, perhaps timely, stating: “The value of the Trump Media and Technology Group brand could decline if President Trump’s popularity suffers.” This has been cited as a “risk factor” in holding the company’s shares.

So here we are. Since July 21, when President Joe Biden ended his re-election campaign and endorsed Vice President Kamala Harris to run against Trump, the stock has been headed toward oblivion.

Trump Media and Technology Group Recognizes Limits on Donald Trump's Duty to Use His Social Media Platform

Since then, shares of the company that bears Trump’s initials (DJT) as its ticker have lost nearly 39% of their value. (The broader stock market, as measured by the Standard & Poor’s 500 Index, has gained nearly 2% over the same time period.)

The stock has gained only five times in daily value during that period, losing 17 points. Shares closed Tuesday at $21.42, down 82 cents, or 3.71%, after falling 3.56% the previous day.

In the context of DJT’s extensive history as a public company, that’s hardly surprising. Measured by its closing price of $57.99 on March 26, when it went public, the stock is down about 63%. Measured by its peak price of $79.38, which it reached that day before tumbling, the loss is 73%. Pick whichever one you like; both fit the dictionary definition of “ugly.”

DJT could certainly recoup some or all of its daily decline by the end of trading Tuesday, and perhaps even emerge from the longer-term slump it now appears to be locked in. The stock’s volatility has made GameStop look like a stoic, stable asset.

However, headwinds are growing – and it's no secret.

Of course, the main headwind is the one the annual report points out: Trump himself. Since Biden’s withdrawal upended the presidential race and brought Kamala Harris to the forefront, Trump’s chances of winning the November election have clearly faded.

Read more: Column: Trump may be laughing all the way to the bank with his Truth Social stock — but his investors have reason to cry

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Meanwhile, Trump’s rhetoric and on-stage behavior have become more rabid and inept. His standing among the Make America Great Again movement may remain strong, but his appeal among independent voters seems to have diminished – not strengthened. Given that DJT is a proxy for his campaign, its decline is not surprising.

But there is another counterweight that has become more important. One is the question of what Trump intends to do with his shares in the company, which amounted to 59.9% of the total as of mid-July, according to its financial reports. Trump will be entitled to sell any or all of those shares starting in mid-September, when the six-month lockup period ends.

Any sign that Trump is moving to divest his exposure to Donald Trump Investments would likely send the stock price sharply lower; the expectation that he plans to leave outside investors on the hook, as he has done with investors, partners and customers in other ventures, may be responsible for some of the weakness in the stock.

Trump owns so much of the company that he could make $1 billion or more by selling shares before other shareholders have a chance to walk out the door without taking a loss.

Trump has already shown that he doesn’t take his responsibility to support Truth Social seriously. He founded the platform as an alternative to Twitter (now X) after being fired from Twitter in the wake of the January 6 uprising. But there is no contractual requirement that Trump use Truth Social as his sole social media outlet.

One of the terms of the licensing agreement with DJT states that he must post his personal social media communications on Truth Social six hours before they are posted on other platforms.

But his agreement with the company allows him to post “politically related” messages on any platform he chooses — and he has the sole right to decide which posts fall into that category. The company says it “lacks any meaningful remedy” if it disagrees with his classification of posts as “politically related.”

Elon Musk restored Trump’s X account in November; he had rarely posted there until recently, when his activity began to pick up. Trump has tweeted a few times on the platform. Most notably, on Aug. 12, he joined Musk for a two-hour tour, The flawed “interview” On X, not social truth.

There's also the company's status as a going concern. It makes all the disclosures required of public companies in the United States, but anyone reading those disclosures would do well to open the window first.

Read more: Column: Trump's Media Company Goes Public, Earning Billions. Why Would Anyone Invest?

Financially, though it still has a market cap of $4 billion, the company is unlike anything value-based investing pioneers could imagine. Benjamin Graham and David DoddIn its latest quarterly disclosure, released on August 12, the company reported a loss of $344 million on revenue of $1.4 million during the first six months of this year.

No one who has followed Trump's career with even the slightest interest can be shocked by these numbers — or even by the fact that the stock has performed so well in spite of them.

Social Truth has been a joke from the start — a joke on many of the same people who still fly “Trump Won” flags from their front yards or wear red MAGA hats in mixed corporate events. Written before the IPOIt went public through a special purpose acquisition company, or SPAC, a process often used to circumvent government rules on disclosure to investors. SPACs have fallen out of favor as many of these deals have fallen through; Truth Social was the most high-profile of these, but its fate may not be any different.

In that first annual report, released on April 1, the company revealed that it doesn’t consider itself a real social media company at all. It said it doesn’t plan to “collect, monitor, or report” the traditional metrics used by other social media platforms, such as “average revenue per user, ad impressions and pricing, … monthly and daily active users” — in other words, all the stats that tell a social media company who, if anyone, is using it, and what their engagement is worth in dollars and years.

The report said that obtaining this information would only “transform” the company's management, although it was not clear how management would strategize for the future if it did not know where it was now, including how many users it had.

I wrote in 2021, when the SPAC deal to take Truth Social public was first announced, that it was ready to go public. High mark for investment plans In April, a month after the IPO, Trump may end up laughing all the way to the bank, but his investors won’t be happy. All I have left is tears.

We are well on our way to that glorious moment when I can say, “I told you so.” Or maybe we are already there.

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This story originally appeared in Los Angeles Times.