Trump's 'free-speech' social media rallies in public debut, showing massive support

Ironically, getting banned off social media worked out pretty well for the former president

Donald Trump’s social media platform launched in public trading Tuesday via a backdoor listing – and surged on debut. 

Trump Media & Technology Group, which owns Truth Social, took the place of publicly traded shell company Digital World Acquisition through a SPAC merger. The new stock ticker, “DJT” for Donald J. Trump, skyrocketed as much as 59% in early trading before settling the day at $57.99 per share, up 16%. 

The rally came despite Truth Social’s financial woes – for the first nine months of 2023, it reported $49 million in losses and just $3.4 million in revenue, according to filings. Nevertheless, at about $8 billion, Truth Social surpassed Reddit’s IPO market value, though the latter generated 160 times that revenue.

To be sure, fundamentals are never considered for new tech companies. Redditt, which debuted last week, has nearly doubled to $12 billion in market cap. This despite losing money every year. Additionally, according to those who were offered to buy Redditt when it was private, the company was once valued at $2.5 billion in the private market while it was only generating $25 million in revenue. So yes - startup valuations aren't exactly easily defendable. The same can be said for Trump's social media company. 

Poetic justice?

Trump’s social startup launched in early 2022 after the former president, now presidential candidate, got booted from Facebook and Twitter (X) following the Jan. 6 attack on the U.S. Capitol. Consequently, both platforms let Trump back in, but he seems to have deliberately limited his appearance there. Possibly to avoid getting banned again and keep them for extraordinary use again one day, I’d guess.

Ironically, however, Trump can now claim victory for his forced departure. He not only has been able to speak freely on all sites, his speech is so in demand that it's made him twice as wealthy - something his opponents never foresaw. 

Truth Social positions itself as a free-expression platform rivaling biased media giants. In its prospectus, it strikes at Meta (Facebook, Instagram), X, Netflix, Alphabet (Google), and Amazon, saying they “may curtail debate in America and censor voices that contradict their woke ideology.” It also criticizes X specifically for suppressing “conservative speech (including at the behest of U.S. government officials) through various means, including ‘shadow banning’.”

Yet the platform didn’t get a strong enough following in its two years in business. Apart from the financial instability, Truth Social struggled with attracting a user base large enough to compete with other major platforms. And its user numbers are also declining further, according to data from SimilarWeb. Last month, Truth Social had about 494,000 mobile app users and 648,000 visitors to its website – down 51% and 20%, respectively, from the same time a year ago, according to the firm.

To compare, X counts 75 million monthly active users, while Facebook has 142 million.

But the hype came regardless, and in spite of, Truth Social’s underperformance, signaling a major disconnect. Its market value placed it alongside some established industry leaders and provoked flashbacks to meme stock rallies.

Market analysts and commenters across the board are saying the hype won't last. You’d hardly find an expert predicting long-term value for the investors. Instead, media are warning of risks like Trump’s legal problems and X’s new ownership and a new take on free speech, which takes away from Truth Social’s uniqueness.

Yet nevertheless… While experts are saying the valuation of Truth Social defies all market logic and DJT is bound to decline according to its fundamentals, the debut was a clear demonstration of Trump’s active supporters in the year of the elections. And at times like this, it just may be the most active community, as opposed to the most numerous, that gets its way.

Images: Truth Social et al