Trump's Truth Social stock rises 40% on first day of Nasdaq trading

NEW YORK (AP) — Shares of Donald Trump's social media company jumped nearly 50% on the first day of trading on the Nasdaq Stock Exchange, boosting the value of Trump's large holdings in the company as well as the stakes of smaller fans who bought shares as a show of support for the former president. .

Trump Media and Technology Group It was acquired on Monday by a blank check company The company is called Digital World Acquisition Corp. Trump Media, which is operated by Truth Social social media platformhas now taken Digital World's place on the Nasdaq stock exchange.

Before trading began, Trump Media's market cap was about $6.8 billion, a number that will rise significantly if early gains in the stock continue. The stock trades under the ticker symbol “DJT”. Trump card It owns approximately 60% of the company's shares. As of 9:55 a.m. ET, shares were up 47% to $73.50.

Many of Trump Media's investors are small investors either trying to support Trump or aiming to profit from this craze, rather than large institutional and professional investors. These shareholders helped Digital World's shares more than double this year in anticipation of the merger.

These investors may face a bumpy ride. First, they are betting on a company with vague prospects for profit. Trump Media lost $49 million in the first nine months of last year, when it generated just $3.4 million in revenue and had to pay $37.7 million in interest expenses. In a recent regulatory filing, the company cited the high failure rate of new social media platforms, as well as the company's expectation that it will lose money in its operations “for the foreseeable future” as risks for investors.

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Social truth Launched in February 2022This is one year after Trump was banned from using major social media platforms including Facebook and X, formerly known as Twitter, in the wake of the January 6 insurrection at the US Capitol. He has since been brought back to both but has stuck with Truth Social.

Trump appeared on Monday In court in New York During a hearing in a criminal case involving hush money payments to cover up allegations of infidelity. Afterward, Trump told reporters, “Truth Social is doing very well. He's hot as a gun and doing a great job.”

However, Trump Media has yet to reveal Truth Social's user numbers, although that should change now that the company has gone public. Research firm Sameweb estimates that Truth Social had nearly 5 million active mobile and web users in February. That's significantly lower than TikTok's more than 2 billion and Facebook's 3 billion — but still higher than other “alt-tech” competitors like Parler, which has been offline for nearly a year but plans to return, or Gettr, which has Fewer than 2 million visitors in February.

Besides competition in the social media space, Trump Media faces other risks, including Trump's to some extent.

Trump Media, based in Palm Beach, Florida, said in a regulatory filing that it “depends heavily on the popularity and presence of President Trump.” If the former president limits or severes his relationship with the company for any reason, including because of his campaign to regain the presidency, the company “would be significantly harmed.”

Acknowledging Trump's involvement in several legal proceedings, the company noted that an “adverse outcome in one or more” of the cases could negatively impact Trump Media and Truth Social.

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Another risk is that Trump, as a controlling shareholder, will be entitled to vote his shares in his own interest, which may not always be in the interest of all shareholders overall, the company said.

If recent trading activity is any indication, investors should expect stocks to be volatile. Shares of Digital World more than doubled this year before shareholders voted to merge with Trump Media. After the vote on Friday, shares fell about 14%, but rebounded strongly on Monday with a gain of 35%.

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