Donald Trump’s much-anticipated social media venture, Truth Social, is poised to debut on the Nasdaq stock exchange on Tuesday, marking a significant milestone for the former president’s foray into the tech world. The platform, operating under the parent company Trump Media & Technology Group, will replace Digital World Acquisition following the completion of a merger between the two entities. This move comes after Digital World’s shares experienced a notable uptick of approximately 25% in Monday’s trading session, rebounding from losses incurred on Friday following investor approval of the merger deal.
With a market valuation estimated at around $5.5 billion upon its Nasdaq debut, Truth Social’s parent company commands a substantial valuation, despite accumulating significant losses since its inception in 2021. University of Florida professor Jay Ritter noted the discrepancy between market price and fundamental value, likening Truth Social’s trajectory to the volatile fluctuations observed in stocks like AMC and GameStop, influenced by social media-driven trading frenzies.
However, Truth Social faces stiff competition in the crowded social media landscape dominated by giants like Facebook and TikTok. Recent data from research firm SimilarWeb indicates a decline in user engagement for Truth Social, with a 51% decrease in mobile app users and a 20% decline in web visitors compared to the previous year.
The success of Truth Social hinges on its ability to leverage Trump’s personal brand and charisma to attract users. Yet, regulatory filings underscore potential risks associated with Trump’s business history, including past bankruptcies of companies linked to him. Moreover, uncertainties surrounding Trump’s legal battles, such as the civil fraud judgment and defamation trial loss, add further complexity to the company’s outlook.
Despite these challenges, Trump’s stake in Trump Media has surged in value following the rise in Digital World shares, providing a crucial financial lifeline as he navigates legal proceedings. However, Trump’s gains remain theoretical until restrictions preventing him from selling or using shares as collateral are lifted by the company’s board, which notably includes several Trump allies and former administration officials.
As Truth Social embarks on its Nasdaq debut, all eyes are on the platform’s performance and its potential to carve out a niche in the competitive social media landscape under the banner of the Trump brand.
