Trump Media surges closer to Musk’s X amid stock frenzy

The Trump Media & Technology Group (TMTG), which operates the Truth Social platform, has experienced a significant stock surge as the November 5 presidential election approaches. Currently, its value is almost on par with Elon Musk’s X, the social-media giant formerly known as Twitter.

Stock rally increases TMTG’s market cap

On Monday, TMTG shares, trading under the symbol “DJT,” soared 17% to $45.58/share by 11:15 a.m. ET, following a bustling Trump rally at Madison Square Garden in New York City. This latest boost has propelled TMTG’s market capitalization to approximately $9.1 billion, despite reporting total revenue of $1.6 million for the first half of 2024 and significant losses.

In contrast, since Elon Musk acquired Twitter in 2022 for $44 billion and renamed it X, the company’s value has decreased significantly. Recent disclosures indicate that X is currently valued around $9.4 billion.

Trump’s holdings and investor sentiment

Trump’s beneficial ownership of 56.6% of TMTG’s outstanding shares means his stake is now valued over $5 billion. This stock surge, analysts suggest, reflects investor optimism about Trump’s chances in the upcoming 2024 presidential election against Vice President Kamala Harris. The surge embodies a unique scenario where a company’s value heavily hinges on political outcomes.

Gene Munster, managing partner at Deepwater Asset Management, expressed his astonishment, stating, “I’ve never seen anything quite like this. This company’s value is almost entirely based on the outcome of an election.”

Musk’s support and involvement

Elon Musk, CEO of Tesla and SpaceX, who is also an ardent Trump supporter, was a notable speaker at Trump’s NYC rally. Despite Musk’s extensive portfolio and influence, X’s valuation faces challenges, reflecting the volatile nature of the social media industry post-takeover.

Financial performance and market behavior

Following an insider lockup expiration in September, TMTG shares hit a low closing price of $12.15 per share. However, Trump maintains he has “absolutely no intention” of selling his shares. Remarkably, TMTG’s stock rally occurred despite no major positive financial disclosures. For the second quarter of 2024, TMTG reported net sales of $836,900 and a net loss of $16.37 million. For the first quarter, the company reported $770,500 in revenue and a net loss of $327.6 million, largely due to merger expenses from consolidating with Digital World Acquisition Corp.

Truth Social’s market position

Launched in early 2022, Truth Social is promoted as a “safe harbor for free expression amid increasingly harsh censorship by Big Tech corporations.” Founded by Trump in 2021 after bans from major platforms like Twitter, Facebook, and YouTube for violations linked to the January 6 Capitol attack, Truth Social remains Trump’s preferred platform.

While Musk reinstated Trump’s account on X after acquiring Twitter, Trump continues to favor Truth Social over returning to other major platforms. Interestingly, TMTG has refrained from disclosing user metrics for Truth Social, indicating their strategic focus lies elsewhere.

Looking ahead: Election implications and market dynamics

The current surge in TMTG stock underscores how election outcomes can dramatically sway investor confidence and company valuations. Should Trump win the 2024 presidential election, the optimistic projection for TMTG could see further validation. Conversely, a different electoral outcome might challenge the sustained high valuations, underscoring the high-risk nature of politically-influenced investments.

TMTG’s recent performance illuminates the complex interplay between politics, market sentiment, and corporate valuations. With both Trump and Musk being pivotal figures entwined in this narrative, the upcoming months will be telling in determining the financial trajectories of TMTG and X.

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