Shares of Truth Social, former President Donald Trump's social media startup, rose 16% on its first day of trading, after the largest "blank check" or "SPAC" deal in years added billions to his wealth.
Shares rose about 59% to more than $70 in early trading, giving the company a market value of more than $9 billion. But it ended the day at around $58, which means an increase of 16% from the opening price.
Trump's roughly 60% stake in the unprofitable company behind Truth Social may eventually be worth more than $6 billion, based on its filings with the US Securities and Exchange Commission, according to Bloomberg calculations. However, he cannot sell the stake immediately due to a 6-month lock-up agreement, which hampers his ability to liquidate the shares and alleviate his current cash crunch. Up to $1.6 billion of that paper wealth also depends on stocks meeting performance requirements.
Trump Media's Truth Social, a Twitter-like service, generated just $3.3 million in revenue in the first nine months of last year and lost nearly $50 million.
The company said that 8.9 million accounts have been created since the platform was launched to the general public in 2022 as an alternative to major communication platforms such as Facebook, but it is not clear how many accounts are active.
In comparison, the recently listed Reddit currently has a market value of about $11 billion. It has more than 70 million users and generated $800 million in revenue last year.
Christy Marvin, CEO of SPACInsider, compared Trump Media - which trades under the ticker DJT for Trump's initials - to meme stocks, in which prices are not constrained by business prospects, according to what the BBC reported.
Interest in Trump's media has also been boosted by individual investors, as opposed to Wall Street firms, many of whom are apparently Trump supporters.
“Everyone expected trading to be a little crazy today, which is what happened,” she said. “The real question is how it will trade a week from now, or two weeks from now and no one really knows.”
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