New York
CNN
—
Beginning Tuesday, there’s a new company on the Nasdaq: Trump Media & Know-how Group, which can commerce underneath the inventory ticker DJT.
DJT, in fact, stands for Donald John Trump, underscoring the corporate’s raison d’etre — giving a megaphone (and a critical money infusion) to the presumptive Republican nominee. The corporate’s essential product, Reality Social, was Trump’s fast and soiled resolution to his ban on virtually each mainstream social media app within the wake of the January 6, 2021, assault on the US Capitol.
The social media app was by no means a blockbuster, although, and it’s unclear how the corporate will ever earn a living.
If that every one sounds acquainted, that’s as a result of we’ve been down this street earlier than.
Whereas Trump Media could also be new, its inventory ticker is a throwback to Trump’s solely different publicly traded firm. Trump bestowed the identical initials on his Atlantic Metropolis on line casino enterprise, Trump Resorts and On line casino Resorts, again when that firm went public in 1995.
It didn’t go nice. At the very least, not for traders.
Trump Resorts and On line casino Resorts by no means turned a revenue and ended up in chapter in 2004, wiping out shareholders.
Trump’s firm misplaced cash each single 12 months of its existence, placing it greater than $600 million in the pink — regardless of proudly owning premier Atlantic Metropolis casinos, together with the Trump Taj Mahal, a spot so opulent Trump known as it “the eighth marvel of the world.”
The inventory misplaced 90% its worth in its first 5 years as a public firm.
But Trump himself made out fantastic. Between 1995 and 2004, Trump took residence about $40 million in wage, bonuses and choices — commonplace for a CEO. Then there have been the much less widespread moneymaking strategies, together with consulting contracts, licensing offers and reimbursements for the usage of his private jet and golf programs. These atypical funds made up about half of the cash Trump made throughout his tenure as the corporate’s chief.
“The cash I took out of there was unbelievable,” Trump advised the New York Times in 2016.
Trump’s inventory holdings had been worn out within the chapter. However he continued to make hundreds of thousands of {dollars} from the corporate after it got here out of chapter, pocketing $6.1 million from the re-named Trump Leisure Resorts firm, which traded underneath a brand new ticker — you guessed it! — TRMP.
The brand new title and ticker didn’t assist the corporate, although. It misplaced $2 billion over 5 years and filed for chapter a second time in 2009.
Like its predecessor, the brand new DJT is having fun with some market enthusiasm following the merger between Trump’s media entity and Digital World Acquisition Corp. Shares of DWAC surged 40% Monday and are up over 170% over the previous six months.
However a take a look at the basics suggests the inventory is wildly overvalued. Trump Media generated simply $3.4 million of income by the primary 9 months of final 12 months, in line with SEC filings.
“The inventory value is clearly a bubble,” Yale legislation professor Jonathan Macey told my colleague Matt Egan final week. “No rational investor would take the inventory at face worth, particularly in the event that they needed to maintain it for any size of time.”
In the meantime, Reality Social’s consumer base is shrinking – extra so than that of X, the corporate previously referred to as Twitter.
At present costs, Trump’s stake is valued at about $4 billion. In concept, he’s not allowed to promote that inventory for a number of months after buying and selling begins. However there might be workarounds to that so-called lock-up interval, if the corporate’s board of administrators enable it.
And the board could also be extra amenable to green-lighting that now that Trump’s civil fraud bond obligation has shrunk by greater than 60%. Trump must promote a a lot smaller sliver of his stake in Trump Media to cowl his modified bond fee — $175 million, down from $454 million — to cowl any shortfall.
— CNN’s Matt Egan contributed reporting.