The stock of Truth Social, the social media platform launched by former President Donald Trump, has experienced a significant surge in its initial days of trading.
The parent company of Truth Social, Trump Media & Technology Group, noticed an enormous 16% increase on Tuesday, marking a strong start for its debut in the market. During afternoon trading on Wednesday, there was a significant 14% increase in the stock.
Trump's Truth Social Stock Surges
Considering Truth Social's low sales and profit margin of about $1 million each quarter, the company's stock price increase has increased the valuation to almost $8 billion. Trump may eventually profit financially from this stock performance to the tune of several billions of dollars given his 60% ownership stake in the company.
Experts who contacted ABC News claimed that the surge in the stock was a result of a buying frenzy by Trump supporters and astute traders hoping to cash in on the momentum, instead of any connection to the company's financial status.
Meme stocks gained popularity and were used as a weapon against hedge funds who were aggressively betting against firms like GameStop. The only thing on the agendas of the other investors was money. Experts have cautioned about potential risks associated with these erratic investments, though. Experts now projected a stormy future for Trump Media, akin to the unpredictability of "meme" stocks.
Mitchell Standley made his first investment in Digital World Acquisition at the beginning of 2022. This public shell firm eventually joined with Trump Media to make possible the latter's first public offering. After spending many months contributing to the Wall Street Bets subreddit, he saw an opportunity to profit from the stock because it was well-liked by those who supported the former president.
His investment was a wise one; in just four hours, he turned $750 into around $4,500. Standley saw a chance to try his hand at investing in stocks once more when the price of Digital World's shares started to increase in anticipation of its merger with Trump Media, according to USA Today.
Trump's Truth Social Sees Surge Amidst Volatile Market
He taken advantage of a more refined investing technique last week when he purchased two "call options" from the business. For $100, one option was purchased, while the other cost little over $160. The people in question claim that because of the high market demand, both things sold rapidly, generating a profit of more than $3,000.
People like Standley who want to sell their shares in Truth Social are common on online forums on websites such as Reddit.
This year has seen a remarkable increase in the value of Trump's social media platform, TMTG, with its shares nearly doubling in value.
The surge in popularity of meme stocks among investors is the reason for this growth. Those who gambled against the company have lost a lot of money, short sellers have written down $158 million on their stakes in TMTG and Digital World Acquisition this year alone.
TMTG is set to invest a hefty $300 million in Truth Social, its social media platform. In order to capitalize on the ban on Trump's accounts on many social media platforms, especially Twitter (now X) and those run by Meta Platforms (META.O), the platform was unveiled in February 2022.
Truth Social received 8.9 million sign-ups in February, a record number of users. The average sign-up value for the platform was more than $1,000. A recent report says that, depending on how his presidential campaign turns out, Trump may think about selling his interest in Truth Social and taking a leave of absence from the company's management.
The US Department of Justice is presently looking into the merger deal that was inked in October 2021 with Trump's business. The real business and its long-term prospects appear to be distinct from the TMTG and Truth Social's erratic pricing and valuations, Reuters reported.
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