In the 1980s my father gifted me some stock in a company he co-founded, thereby assuaging his guilt for ignoring me after he and my mother divorced, causing me to only spend one hour in my life face-t0-face with him aside from my very early years.
The company, Systems and Computer Technology Corporation, traded on the NASDAQ as SCTC. That's where Donald Trump's company trades also. Its name is Trump Media & Technology Group Corporation; stock ticker is DJT.
Aside from sharing a home on the NASDAQ, there aren't many resemblances between SCTC and DJT. When SCTC went public, the value of the stock rose for quite a while. Partly this was because computer related companies were a hot commodity in the 1980s. Also, SCTC had actual earnings.
Eventually, though, the SCTC bubble burst. Thankfully, after I'd sold most of my shares. There was some sort of scandal involving faulty financial reporting by company executives. I've forgotten the details. Mostly what I remember is a lasting lesson: initially I thought SCTC would keep on rising in value. Since the stock had sentimental value for me, I held onto it for longer than I should have.
Likely many of those who have been buying shares in Trump's company are first time stock-buyers who love Trump and believe that because he's such a great businessman, DJT will be a great long-term investment.
Here's news for them: Trump isn't great at business, or anything else, and buying DJT is an excellent move... if you want to lose money. After an initial price surge by eager Trump lovers, last Monday DJT lost more than 25% of its value after a dismal company report of a money-losing 2023,
I happily marked the occasion with a screenshot. "Happily," because I detest Trump, and I feel that anyone foolish enough to buy shares of DJT deserves the losses that almost certainly await them.
Today DJT ended up at 46.15. So the stock not only hasn't recovered from the 25+% slide, it has declined a bit in value.
An April 4 story in Los Angeles Magazine, "Trump Media Rapidly Losing Value," explains why DJT is such a lousy investment.
Donald Trump’s latest business endeavor, Trump Media, might have been fool’s gold.
The media company, largely made up of Trump’s social media app, Truth Social, merged with shell company, Digital World Acquisition Corporation, and began trading on March 26.
The stock initially soared to $79.38 per share but has since plummeted to $46.15, marking a loss of more than a third of its value in a week.
Trump has continually touted his social media app as “amazing” and “very solid.” He also said that “it is the primary way I get the word out.”
“For better or worse, people want to hear what I have to say, perhaps, according to experts, more than anyone else in the world,” Trump said.
The former president used to be an avid user of Twitter before he got permanently suspended on the platform on January 8th, 2021 for “risk of further incitement of violence.” That was two days after he led a rally on the National Mall in Washington D.C. that resulted in protestors storming the Capitol.
Trump was reinstated after Elon Musk bought Twitter but has only used the account to tweet once since then.
Unfortunately for Trump, Truth Social has failed to garner the anticipated traction, even among his political allies.
Meidas Touch, an independent news network, reported that the only Republican senators actively using the app were Marsha Blackburn, Katie Britt, Chuck Grassley, James Lankford and Tommy Tuberville — five out of 49 Republican Senators.
The network, which is partly owned by one of the same owners as Los Angeles Magazine, stated that “even those five are simply transferring the same posts they make on twitter onto Truth. So not a single Republican Senator is making unique Truth Social-only posts. Not one is using it exclusive of other platforms or posting anything original or unique on there.”
Trump currently has ownership of 78.8 million shares of the company, equating to a 57.3% stake. Nonetheless, he is constrained by a mandatory six-month lockup period before he can divest any shares, meaning the company’s value could be drastically different by the time he is able to cash in.
Barry Diller, Chairman and Senior Executive of IAC and Expedia Group and founder of the Fox Broadcasting Company and USA Broadcasting, had some harsh words of his own to say on CNBC when asked about Truth Social.
“I mean it’s ridiculous. The company has no revenue,” he said, even going on to call its investors “dopes” and say “it’s stupid [to buy shares]."
“It's a scam. Just like everything he's ever been involved in is some sort of con,” Diller said.
A Politico story says:
For many investors, Trump Media has become a proxy for wagering on Trump and his chances in November, market experts say. But Wall Street veterans have questioned the stock’s multibillion-dollar valuation, given the money-bleeding business that is at the heart of Trump Media. The company just reported a net loss of $58 million for 2023 on revenue of just over $4 million.
Many Wall Street traders, meanwhile, have bet against the stock.
“It’s not a company, it’s a movement,” said Gene Munster, a managing partner at Minneapolis-based Deepwater Asset Management. “If it was valued like a normal company, it would be a fraction of its current valuation. Investors tend to look at the growth prospects and, separately, the profitability — not in the near term, but the long term. And on both of those metrics, it just doesn’t stack up.”
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