In a remarkable turn of events, shares of Donald Trump’s Trump Media & Technology Group (TMTG) skyrocketed nearly 50% on Tuesday, reaching a staggering $74.80 per share during its much-anticipated Nasdaq debut. 

This astronomical surge propelled TMTG’s market capitalization past the $10 billion mark on an undiluted basis – an eye-watering valuation for a company that reported an operating loss of $10.6 million for the first nine months of 2023 on meager revenues of just $3.4 million.

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• TMTG shares soared nearly 50% in an explosive Nasdaq debut, valuing the company at over $10 billion.

• Trump’s majority stake in TMTG is worth $5.89 billion, providing potential windfall amid legal battles.

• The trading frenzy led to a volatility halt, with TMTG among the top gainers and trending “meme stocks.”

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Trump’s Media Venture TMTG Makes Explosive Debut on Nasdaq; Shares Soar Nearly 50%

The former U.S. president’s majority stake in TMTG was last valued at $5.89 billion. 

However, lock-up restrictions for six months could prevent him from cashing in or borrowing against his shareholding for the time being.

TMTG’s stock market debut follows its merger with the blank-check company Digital World Acquisition Corp, a deal that was first announced in 2021 but faced numerous setbacks and delays along the way.

Meme Stock Mania

Since the merger was announced, the combined entity of Digital World and the newly listed TMTG have surged more than 700%, cementing TMTG’s status as one of Wall Street’s notorious “meme stocks” – highly speculative investments that are popular among retail traders and whose movements can be driven by social media hype.

“The business’s valuation is rich relative to its underlying fundamentals, but I would not get in front of it in the near term,” cautioned Thomas Hayes, chairman of Great Hill Capital. 

” This valuation may be more a proxy for the enthusiasm of Trump supporters than a reasonable estimate of underlying business prospects.”

Trading Frenzy

The trading frenzy surrounding TMTG’s debut was so intense that trading under its new ticker “DJT” was briefly halted just after the opening bell due to volatility. 

According to LSEG data, at 11:54 a.m. ET, TMTG was the third-biggest percentage gainer across U.S. exchanges and the most trending stock on the retail trader-focused social media and trading platform StockTwits.

Trump’s Financial Lifeline

For Trump, who is currently facing four criminal trials in his race for the U.S. presidency, TMTG’s successful debut could not have come at a better time. 

The former president has been struggling to raise funds for his campaign and legal expenses, and the company’s skyrocketing valuation provides a much-needed financial lifeline.

Moreover, TMTG offers Trump’s supporters a way to bet on his resurgence as a political figure, as evidenced by the shares of the shell company Digital World Acquisition nearly tripling in value this year.

Short Sellers Suffer

TMTG’s meteoric rise on Tuesday led to significant losses for investors betting against the stock. 

According to analytics firm S3 Partners, short sellers had racked up $158 million in paper losses this year on their Digital World Acquisition and TMTG positions.

“Today’s price action and valuation are completely out of kilter with the underlying business and its prospects,” remarked AJ Bell investment analyst Dan Coatsworth, highlighting the disconnect between TMTG’s soaring valuation and its actual business performance.

Truth Social Boost

The deal will also inject $300 million in cash into TMTG-owned social media platform Truth Social, launched in February 2022 to capitalize on Trump’s ban from major social media platforms like Twitter (now X) and Meta Platforms.

According to Digital World, Truth Social had 8.9 million sign-ups as of February. 

However, its user base pales compared to established platforms like X (238 million daily active users as of June 2022) and Facebook (2.1 billion users).

However, in a filing last month, Digital World revealed that Trump may divest his stake in Truth Social and cease any involvement in its management, depending on the outcome of his presidential bid.

Regulatory Scrutiny

Despite its meteoric rise, TMTG’s path to success has been marred by regulatory scrutiny. 

The U.S. Department of Justice has investigated the blank-check company Digital World Acquisition Corp, which signed its merger agreement with Trump’s company in October 2021.

As TMTG basks in the spotlight of its explosive Nasdaq debut, investors and industry experts will closely watch the company’s ability to sustain its astronomical valuation and navigate the challenges posed by ongoing legal battles and regulatory probes.