The Trump Media IPO
The recent IPO of Trump Media & Technology Group, owner of Truth Social, on the stock market has been unlike what the public would expect. Trading started with a big jump, but started to cooled off by the end of the day, differing from what investors thought and the company's actual situation.
Trump Media's stock went up a whopping 56% when trading began, causing a pause due to too much activity. But as the day went on, it had died down, and the company ended with a more modest 16% gain. Still, it's valued at nearly $11 billion, which seems really high given that Truth Social isn't doing well.
Truth Social has way fewer users compared to big social media platforms like X and Facebook. Additionally, its number of users has been dropping a lot, making people wonder if it can survive against the competition. Despite this, Trump Media is getting a lot of attention, similar to what happened with GameStop and AMC during the pandemic.
Experts like Jay Ritter warn that Trump Media's value might not match reality, just like those other companies. The main reason for all this excitement is Donald Trump himself. His involvement in the company brings a lot of attention. I personally find the unwarrented demand of the stock slightly suspicious especially because Truth Social has been losing users. Relating supply and demand graphs, the taste of the public for Truth Social is declining yet the demand for their stock is relatively high. Could this be a result of the publicity that comes with Donald Trump or could it be indicative of something happening internally?
8 comments:
I feel like, as you've mentioned Ansel, this excitement is not due to the platform itself but to Trump's publicity of it. It seems to me that Trump uses his political position for personal benefits. Many people fanatically follow him, and he knows this, so he can use that influence to promote the stock that he has. I also feel like the conservative movement talks about the "dangers of the mainstream liberal media," so Trump having his own social media platform (after getting banned off of some previously) is a good marketing tactic and may draw his followers. Radical republicans may want to believe this platform will help them combat the mainstream media. However, if the actual platform has no value, I can see how there would be a decrease in interest after the initial hype of Trump's publicity.
I agree that this has to do with Trump's reputation and influence, and I think it's interesting how much social media has affected the stock market. In addition to the situations with GameStop and AMC that Ansel mentioned, Elon Musk was another figure that had a ton of influence over not just stocks, but also crypto over the pandemic. Also, with Threads, there was a lot of excitement over the initial release, but now it's tapered down a ton. With the state of X these days though, I do think there could be a hole in the social media space, but I don't think Truth Social is in any place to fill it.
Truth Social is not nearly, and I don't think will at some point, be as popular as social media platforms with a lot of users like Facebook and Twitter/X because members of all political parties use those platforms, but if you're democrat or independent you are a lot lot less likely to use Truth Social because it's a Republican-run company. Personally I've never heard of Truth Social in my life, but now I do because of its IPO, which may be the same case for a lot of people and bring more attention to the platform. If Trump wins the presidential election later this year it'll be interesting to see how the stock price reacts.
I definitely agree that the hype over Truth Social and it's high valuation are almost entirely due to the cult mindset surrounding Trump himself. I honestly expected a lower evaluation because, as previously stated, only far right Republicans really use Truth Social as a social media platform, so I personally think that value is a bit inflated. Facebook, Instagram, Twitter and other social media platforms are more universally used, so you would think that Truth Social wouldn't have such a high evaluation.
Truth Social is the perfect example of Trump's influence, as despite the platform itself not showing any signs of success, Trump is able to twist it into appearing to be growing. However, one can not expect that Trump will be able to commit this amount of time and energy to the platform, and this will likely decrease if he is elected. In such a case, the stock could either drop, as Trump is no longer committing as much of his attention to it, or it could potentially rise as a result of a growth in Trump's influence and potential credibility (being the President in that case). I could see a reality where Trump continues to use Truth Social during a potential presidency as a means to garner further support for his policies, only boosting the platform's popularity further. It will be interesting to see what becomes of this seemingly inflated stock and the influence it represents.
Truth Social is reliant on Trumps promotion of the platform. The company’s social media platform is the same or worst than competitors, and its selling point as a place which protects users "free speech" is nothing special given the reduced moderation of other platforms such as Twitter. The value of the company doesn’t necessarily come from the profit it generates (Its net income was -9.18 million dollars last year) but rather the echo chamber of conservative content used to influence users to vote for Trump. While most current users are hardline Trump conservatives, marketing the platform to independents/moderate voters may sway the election in Trumps favor.
Truth Social's rise in popularity is definitely due to Donald Trump's involvement with the company. As you mentioned, the stocks seemed relatively high for an app that doesn't have as many users, so I think it raises questions about the sustainability of this newfound enthusiasm for Truth Social.
According to CNN, in the first 29 days of April, the "average number of users dipped 4% month over month". One reason for this dip in user participation could be the rising attention related to Trump's current criminal trial and the upcoming presidential elections. It will be interesting to see how things regarding Truth Social will continue to unfold. Will the average number of users continue to drop?
Truth social is apparently highly based on twitter, also its users are male dominated. The nature of social media websites often wax and wane, and I would not be surprised that if like facebook, Truth social shall lose traction and much popularity as well (unless it simply remains popular with republicans.) As alluded to by the article, I agree that Trump may be curving the truth a bit to make his website and stocks seem more well-off than they really are, a constant talking point he recycles when speaking of anything he does. Overdoing his confidence in his brand is a sneaky way perhaps for stockholders to maintain their confidence, but it is rather manipulative, as his companies seem to be falling.
Post a Comment