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This has been nearly every value proposition Trump has ever made. Even his presidential campaign is rooted in no small part in the idea that Trump will make you rich. His 2024 campaign is certainly investing a lot of energy in the idea that he has brought, or will bring, an economic windfall to the American people.
The problem, of course, is that the most reliable beneficiary of Trump’s enrichment theory is Donald Trump. In the case of Truth Social, even he isn’t doing so well at the moment.
It’s interesting to think about what Truth Social is offering to potential investors without the Trump element. It’s a social network like X back when it was Twitter. Technically there’s nothing exceptional about it. In fact, it’s just a slightly modified instance of a ready-to-use social media site tool kit called Mastodon.
The only thing that’s different from the others is that Donald Trump owns and posts this venue, and his huge support base points to it as a venue. And that was enough for many people to jump on the stock when it went public, including some who had bet their future on it.
What has been happening since the company went public late last month is not normal. Consider his other three tech stocks, stocks that are a little more focused on the “tech” part.
When Google and Twitter went public in 2004 and 2013, respectively, prices quickly jumped from their initial asking prices and remained fairly stable thereafter. Facebook’s stock price, which went public in 2012, was initially flat, then fell in the following weeks.
Next, let’s stack up the stock price of Trump Media & Technology Group (ticker: DJT). It rose above the asking price and propelled President Trump onto Bloomberg’s list of the world’s 500 richest billionaires. And it began to steadily drop in value.
It was like a small tech stock bubble had burst. pop. Mr. Trump’s stock was worth more than $5 billion at the end of March. On Monday, Forbes magazine announced that the amount was closer to $2.2 billion.
If you compare each stock’s initial sale price to its initial sale price, you can see how much more steeply Trump’s stock has fallen than Facebook’s.
Trump breathlessly claimed to his social media followers (those who, by definition, already use Truth Social) that the company is intertwined with Trump’s broader efforts to overhaul the country. I’ve done it.
“Those who believe in America First and want to make America great again support TRUTH,” he wrote over the weekend, apparently referring to the company rather than the concept of integrity.
This is part of the problem. Trump is overextending. His brand is “common man’s warrior,” but he also needs money. So his brand extends to “Buy this All-American Bible,” “Buy a digital photo of Trump,” and “Buy this Mastodon stock in the parent company of his instance.” If he somehow needs to buy Trump-branded sneakers to make America great again, he may have failed in his plan.
Trump’s allies will point out that the above comparison suggests that perhaps better times are ahead. After all, Facebook and Google and… well, Facebook and Google are doing well. That’s true. Each also had a huge user base and large teams doing innovative work when they went public. Each was based on the idea that innovations could yield higher profits. For Truth Social, by contrast, the key to success was just that…Trump.
Perhaps DJT will be a huge success and the foresight of early investors will be rewarded. Or it could be President Trump’s Taj Mahal II. Feel free to place your own bets on the questions.
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