Truth Social, Donald Trump’s social media platform, has not exactly been a resounding business success story, but it recently made the former president a whole lot richer.
That’s because Trump Media, the network’s parent company, went public last week and catapulted Trump’s net worth to an estimated $7.5 billion.
Now you might be wondering how Trump’s social media company is worth that much money. And the short answer is: It isn’t.
On Monday, after the company reported more than $58 million in losses against a mere $4 million in revenue last year, the stock went tumbling down, plummeting by some 21 percent in a single day.
But even so, when stocks closed on Wednesday, the company was valued at around $6.6 billion, putting it in a similar league as social media giants like Reddit. (When Trump Media first went public, its market capitalization peaked at roughly $10 billion.)
The long answer, however, is that while Trump Media’s valuation is entirely illogical from a financial perspective — as one finance professor told CNN, “The stock is pretty much divorced from fundamentals” — its early success in trading can be boiled down to one simple fact: Donald Trump is running for president, and there’s a decent chance that he’ll be back in the White House this time next year.
Truth Social, in other words, is a way for Trump’s supporters to personally offer him financial support at a time when he desperately needs it. That might be why the company’s volatility looks similar to meme stocks for now. As one analyst told my colleague Nicole Narea, people might buy up Trump Media stock so “they can express their beliefs and commitment.”
For those with deep pockets, it’s also an opportunity to curry favor with the former president.
Why does any of this matter?
Before becoming one of the world’s richest 500 people on Bloomberg’s billionaires index for the first time last week, Trump was in financial trouble.
He was…
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