On Reddit and Truth Social, users have been trying to recreate the meme stock magic for Trump Media and Technology Group, the company behind Truth Social, which fueled companies like GameStop in 2021. So far, they haven’t been very successful.
The Truth Society, former President Donald Trump’s Twitter impersonator, has lacked two essential elements in its previous campaign narrative: fundamentals and the foil of institutional investors. Large hedge funds shorted GameStop, betting the price would fall. This time, the stock is largely held by retail investors.
Unlike other social media companies, Truth Social does not disclose how many users it has, but has previously said the site has just 9 million registered users, compared with Facebook’s more than 3 billion monthly active users. Visits to TruthSocial have dropped from 5.4 million in January to about 5 million in February, according to data from web analytics firm SimilarWeb. The site’s lack of users resulted in poor financial performance.
On the r/wallstreetbets subreddit, home of the meme stock booster, most users don’t buy what Truth Social is selling.
“If you invest in this for long enough, you will lose everything. So, strictly speaking, this is just an action scene,” wrote Reddit user Rich4718. “If you think Donald Trump is going to create a revenue-positive social media platform, you’re an absolute idiot.”
The company began trading publicly on March 26 under the ticker DJT and has already experienced wild price swings. On Monday, the stock fell nearly 20%, wiping $2 billion off its market value.
The company said in a filing Monday that it had revenue of just over $4 million and a net loss of $58 million. This follows a shocking admission from the Trump Media and Technology Group’s auditors: The company’s losses “raised significant concerns about its ability to continue as a going concern,” according to a March 25 filing with the U.S. Securities and Exchange Commission. Suspect”.
Although the company reported huge losses, it is still valued at about $7 billion. Trump fans see investing in the company as a way to support the former president, which has bolstered the company’s valuation in part. In some cases, these investors sincerely believe that Truth Social can become a major social media player.
Albert Choi, a law professor at the University of Michigan, said investors in Trump media may be motivated by factors outside of traditional financial logic, such as using hype to drive up prices.
“If that’s your main motivating factor, then you won’t care too much about whether the company actually makes money,” Choi said.
“I believe DJT is an investment in Donald Trump, not just Truth Social,” Reddit user autsauce, who declined to give his real name, told Wired. “If market participants started asking this question (and I bet they will), they would likely come up with a very different price valuing Truth Social in the silos.”
Choi noted that a Trump presidential victory could actually hurt the company’s stock, as investors believe the need to financially support the former president through investments may diminish.
“My guess is that interest in the stock will essentially disappear,” Choi said.