The former president’s company, Trump Media, has experienced a significant reduction in its share price, witnessing more than a 50% loss since its initial public offering in late March. More adjustments are expected as the company’s evaluation remains questionable.
Their social media platform, Truth Social, still holds a staggering $4.5bn valuation. For a company with a reported revenue of only $4.1m last year, this appears wildly overestimated.
The trading ratio of the company is over 1,000 times its sales, starkly contrasting with the 5.2 ratio of the tech-centric Nasdaq index. Other social platforms such as Reddit, Facebook, and Snap exhibit trading ratios of 11, 10, and 4 respectively.
However, Trump Media is noted as a meme stock, with the majority of Redditors who buy and sell acknowledging the irrational valuation. This, paired with the challenge short sellers have experienced in shorting the shares, contributes to its inflated value.
[Unrealistic valuation base of Truth Social]
[‘The meme president’s company as a meme stock’]
The recent plummeting of share price indicates a step towards a more rational evaluation, although instability will likely persist throughout the 2024 presidential race. As with any meme stock, its only predictable attribute is its unpredictable nature.