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Truth Social slips into the red as Trump Media stock hits turbulence

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They say the bigger they come, the harder they fall. That reckoning always comes eventually for meme stocks ‒ and Trump Media & Technology Group appears to be no exception.

Donald Trump’s namesake social media company burst out of the gate on its first day of trading Tuesday, opening at $70.90 and soaring as high as $79.38 as Trump fans and opportunistic traders bought up shares. But the price faded late in the session and has bounced along at lower levels ever since, ending Thursday down $4.26 at $61.96 on the Nasdaq. The stock exchange was closed Friday in observance of Good Friday.

Trump Media’s market valuation, just over $8 billion, is still stunning for a social media fledgling with an unproven business model that has struggled to attract users and advertisers, burned through cash and racked up losses.

“The valuation of the company should be several hundred million, not the billions it is currently valued at,” University of Florida professor Jay Ritter said.

Thursday’s slide into the red could be just the beginning, market observers say. Ritter predicts the vanity stock ticker DJT will bottom out around $2 a share – or worse.

In this photo illustration, Republican presidential candidate former President Donald Trump's social media platform Truth Social is shown on a cell phone on March 25, 2024 in Chicago, Illinois.

“The stock will continue to be very volatile, with sharp moves up and down. But the long-term trend will be down,” he said. “The company has about $2 in cash per share, but it will probably burn through that money and the most likely outcome is eventual bankruptcy.”

Trump also used a vanity ticker for his Atlantic City casino business, Trump Hotels and Casino Resorts, when it went public in 1995. The company never turned a profit and ended up bankrupt in 2004.

Trump Media trading like meme stocks

Trump Media’s trading has mimicked meme stocks like GameStop and AMC Entertainment, which rose to improbable heights in 2021 after individual investors organized on social media platform Reddit to drive up the stock price. Those investors aimed to strike back against hedge funds that had bet against the company and shorted the stock.

“It has all the ingredients to be a volatile stock,” said Jonathan Brogaard, a finance professor at the University of Utah who has researched meme stocks.

What’s tricky is predicting when a meme stock will collapse, said Derek Horstmeyer, a finance professor at George Mason University in Virginia, who specializes in corporate finance. The only hard-and-fast rule? “Eventually, it does,” Horstmeyer said.

News of Trump Media & Technology Group public trading is seen on television screens at the Nasdaq Marketplace on March 26, 2024 in New York City.

Stock price is still high: Is Trump Media overvalued?

Like typical meme stocks, Trump Media is overvalued compared with other social media companies, at least by conventional Wall Street standards. It recorded $3.3 million in revenue in the first nine months of 2023 and a loss of $49 million, but its market value is more than 2,000 times its estimated annual revenue compared to Reddit at 10 times, Meta at 7 and Snap at 6.

“The only way to get to that number is to imagine some sort of immense growth in the platform,” said Brent Goldfarb, a professor at the University of Maryland’s business school and co-author of “Bubbles and Crashes,” a book on financial market bubbles.

But Goldfarb sees “no path to profitability” for Truth Social.

“Unless you believe that Truth Social is the next Facebook or TikTok, I don’t see a reason (for it to be valued this high),” he said.

Truth Social trades on Trump brand, following

Trump Media’s flagship product, Truth Social, trades on Trump’s personality and brand and, while powerful, that comes with risks. Just ask Trump Media.

In addition to Trump’s “death, incarceration or incapacity,” there’s his checkered business history that includes the bankruptcy of the Trump Taj Mahal in 1991 and the Trump Hotels and Casinos Resorts bankruptcy, according to the risk factors listed in a Trump Media regulatory filing.

“A number of companies that were associated with President Trump have filed for bankruptcy,” the filing states.

Trump’s Truth Social has far fewer users than Facebook, TikTok

And, unlike other social media and tech companies that trade on the expectation of growth, the number of users of Truth Social has declined.

Trump Media was formed in 2021 after the former president was barred from major social media platforms after the Jan. 6 attack on the Capitol. Truth Social debuted in 2022 as an alternative to Twitter, now known as X, and serves as Trump’s preferred bullhorn.

Last month, Truth Social had five million desktop and mobile visitors, according to Similarweb, a data and analytics company. Facebook, on the other hand, has 3 billion monthly active users. Truth Social does not release user figures.

“The stock is a way to invest in Trump. The ticker DJT is not a coincidence in any way,” Goldfarb said. “It’s a perfectly above-board way to push money into his pockets.”

 

Trump supporters are propping up stock price

Trump supporters banded together on social media to lift the stock even before Trump Media completed the merger with Digital World Acquisition Corp., a special purpose acquisition company, or SPAC, on Monday. It started trading on Tuesday.

Teri Lynn Roberson couldn’t care less about the business fundamentals.

Roberson, 52, from the Dallas-Fort Worth metroplex in Texas, said she purchased five shares of Trump Media at about $72 a pop, right around the stock price’s Monday peak, to show her support for the former president.

“It’s mainly to support Trump and his legal battles,” she said.

Horstmeyer expects Truth Social’s stock price to swing 10% or more on a daily basis in the coming months. But because the stock’s price is based on sentiment, not hard metrics like revenue and cash flow, the pattern is difficult to anticipate.

“It could either go down to $10 or up to $150,” he said. “The only thing I can predict is volatility.”

Republican presidential candidate, former U.S. President Donald Trump, gestures while speaking during the 2024 NRB International Christian Media Convention Presidential Forum on February 22, 2024 in Nashville, Tennessee.

How much is Donald Trump worth with DJT stock gains?

Trump Media’s Nasdaq debut padded Trump’s wealth by about $5 billion – though only on paper.

And cashing out won’t be easy. Trump Media has restrictions that prevent insiders from selling shares or using shares as collateral for loans for at least six months.

The board which is stacked with Trump allies could waive those restrictions. It could also hold a secondary offering to allow insiders an earlier opportunity to sell.

The risk for Trump Media: If Trump sells shares, it could deflate the stock price.

“Donald Trump has substantial paper wealth in the stock, but the ability to turn it into cash is limited,” Ritter said. “By the time that he can sell shares, the price is likely to be in the single digits. And the more shares that he sells, the lower will be the price.”

 

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What to stream this weekend: ‘Civil War,’ Snow Patrol, ‘How to Die Alone,’ ‘Tulsa King’ and ‘Uglies’

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Hallmark launching a streaming service with two new original series, and Bill Skarsgård out for revenge in “Boy Kills World” are some of the new television, films, music and games headed to a device near you.

Also among the streaming offerings worth your time as selected by The Associated Press’ entertainment journalists: Alex Garland’s “Civil War” starring Kirsten Dunst, Natasha Rothwell’s heartfelt comedy for Hulu called “How to Die Alone” and Sylvester Stallone’s second season of “Tulsa King” debuts.

NEW MOVIES TO STREAM SEPT. 9-15

Alex Garland’s “Civil War” is finally making its debut on MAX on Friday. The film stars Kirsten Dunst as a veteran photojournalist covering a violent war that’s divided America; She reluctantly allows an aspiring photographer, played by Cailee Spaeny, to tag along as she, an editor (Stephen McKinley Henderson) and a reporter (Wagner Moura) make the dangerous journey to Washington, D.C., to interview the president (Nick Offerman), a blustery, rising despot who has given himself a third term, taken to attacking his citizens and shut himself off from the press. In my review, I called it a bellowing and haunting experience; Smart and thought-provoking with great performances. It’s well worth a watch.

— Joey King stars in Netflix’s adaptation of Scott Westerfeld’s “Uglies,” about a future society in which everyone is required to have beautifying cosmetic surgery at age 16. Streaming on Friday, McG directed the film, in which King’s character inadvertently finds herself in the midst of an uprising against the status quo. “Outer Banks” star Chase Stokes plays King’s best friend.

— Bill Skarsgård is out for revenge against the woman (Famke Janssen) who killed his family in “Boy Kills World,” coming to Hulu on Friday. Moritz Mohr directed the ultra-violent film, of which Variety critic Owen Gleiberman wrote: “It’s a depraved vision, yet I got caught up in its kick-ass revenge-horror pizzazz, its disreputable commitment to what it was doing.”

AP Film Writer Lindsey Bahr

NEW MUSIC TO STREAM SEPT. 9-15

— The year was 2006. Snow Patrol, the Northern Irish-Scottish alternative rock band, released an album, “Eyes Open,” producing the biggest hit of their career: “Chasing Cars.” A lot has happened in the time since — three, soon to be four quality full-length albums, to be exact. On Friday, the band will release “The Forest Is the Path,” their first new album in seven years. Anthemic pop-rock is the name of the game across songs of love and loss, like “All,”“The Beginning” and “This Is the Sound Of Your Voice.”

— For fans of raucous guitar music, Jordan Peele’s 2022 sci-fi thriller, “NOPE,” provided a surprising, if tiny, thrill. One of the leads, Emerald “Em” Haywood portrayed by Keke Palmer, rocks a Jesus Lizard shirt. (Also featured through the film: Rage Against the Machine, Wipers, Mr Bungle, Butthole Surfers and Earth band shirts.) The Austin noise rock band are a less than obvious pick, having been signed to the legendary Touch and Go Records and having stopped releasing new albums in 1998. That changes on Friday the 13th, when “Rack” arrives. And for those curious: The Jesus Lizard’s intensity never went away.

AP Music Writer Maria Sherman

NEW SHOWS TO STREAM SEPT. 9-15

— Hallmark launched a streaming service called Hallmark+ on Tuesday with two new original series, the scripted drama “The Chicken Sisters” and unscripted series “Celebrations with Lacey Chabert.” If you’re a Hallmark holiday movies fan, you know Chabert. She’s starred in more than 30 of their films and many are holiday themed. Off camera, Chabert has a passion for throwing parties and entertaining. In “Celebrations,” deserving people are surprised with a bash in their honor — planned with Chabert’s help. “The Chicken Sisters” stars Schuyler Fisk, Wendie Malick and Lea Thompson in a show about employees at rival chicken restaurants in a small town. The eight-episode series is based on a novel of the same name.

Natasha Rothwell of “Insecure” and “The White Lotus” fame created and stars in a new heartfelt comedy for Hulu called “How to Die Alone.” She plays Mel, a broke, go-along-to-get-along, single, airport employee who, after a near-death experience, makes the conscious decision to take risks and pursue her dreams. Rothwell has been working on the series for the past eight years and described it to The AP as “the most vulnerable piece of art I’ve ever put into the world.” Like Mel, Rothwell had to learn to bet on herself to make the show she wanted to make. “In the Venn diagram of me and Mel, there’s significant overlap,” said Rothwell. It premieres Friday on Hulu.

— Shailene Woodley, DeWanda Wise and Betty Gilpin star in a new drama for Starz called “Three Women,” about entrepreneur Sloane, homemaker Lina and student Maggie who are each stepping into their power and making life-changing decisions. They’re interviewed by a writer named Gia (Woodley.) The series is based on a 2019 best-selling book of the same name by Lisa Taddeo. “Three Women” premieres Friday on Starz.

— Sylvester Stallone’s second season of “Tulsa King” debuts Sunday on Paramount+. Stallone plays Dwight Manfredi, a mafia boss who was recently released from prison after serving 25 years. He’s sent to Tulsa to set up a new crime syndicate. The series is created by Taylor Sheridan of “Yellowstone” fame.

Alicia Rancilio

NEW VIDEO GAMES TO PLAY

— One thing about the title of Focus Entertainment’s Warhammer 40,000: Space Marine 2 — you know exactly what you’re in for. You are Demetrian Titus, a genetically enhanced brute sent into battle against the Tyranids, an insectoid species with an insatiable craving for human flesh. You have a rocket-powered suit of armor and an arsenal of ridiculous weapons like the “Chainsword,” the “Thunderhammer” and the “Melta Rifle,” so what could go wrong? Besides the squishy single-player mode, there are cooperative missions and six-vs.-six free-for-alls. You can suit up now on PlayStation 5, Xbox X/S or PC.

— Likewise, Wild Bastards isn’t exactly the kind of title that’s going to attract fans of, say, Animal Crossing. It’s another sci-fi shooter, but the protagonists are a gang of 13 varmints — aliens and androids included — who are on the run from the law. Each outlaw has a distinctive set of weapons and special powers: Sarge, for example, is a robot with horse genes, while Billy the Squid is … well, you get the idea. Australian studio Blue Manchu developed the 2019 cult hit Void Bastards, and this Wild-West-in-space spinoff has the same snarky humor and vibrant, neon-drenched cartoon look. Saddle up on PlayStation 5, Xbox X/S, Nintendo Switch or PC.

Lou Kesten

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Trump could cash out his DJT stock within weeks. Here’s what happens if he sells

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Former President Donald Trump is on the brink of a significant financial decision that could have far-reaching implications for both his personal wealth and the future of his fledgling social media company, Trump Media & Technology Group (TMTG). As the lockup period on his shares in TMTG, which owns Truth Social, nears its end, Trump could soon be free to sell his substantial stake in the company. However, the potential payday, which makes up a large portion of his net worth, comes with considerable risks for Trump and his supporters.

Trump’s stake in TMTG comprises nearly 59% of the company, amounting to 114,750,000 shares. As of now, this holding is valued at approximately $2.6 billion. These shares are currently under a lockup agreement, a common feature of initial public offerings (IPOs), designed to prevent company insiders from immediately selling their shares and potentially destabilizing the stock. The lockup, which began after TMTG’s merger with a special purpose acquisition company (SPAC), is set to expire on September 25, though it could end earlier if certain conditions are met.

Should Trump decide to sell his shares after the lockup expires, the market could respond in unpredictable ways. The sale of a substantial number of shares by a major stakeholder like Trump could flood the market, potentially driving down the stock price. Daniel Bradley, a finance professor at the University of South Florida, suggests that the market might react negatively to such a large sale, particularly if there aren’t enough buyers to absorb the supply. This could lead to a sharp decline in the stock’s value, impacting both Trump’s personal wealth and the company’s market standing.

Moreover, Trump’s involvement in Truth Social has been a key driver of investor interest. The platform, marketed as a free speech alternative to mainstream social media, has attracted a loyal user base largely due to Trump’s presence. If Trump were to sell his stake, it might signal a lack of confidence in the company, potentially shaking investor confidence and further depressing the stock price.

Trump’s decision is also influenced by his ongoing legal battles, which have already cost him over $100 million in legal fees. Selling his shares could provide a significant financial boost, helping him cover these mounting expenses. However, this move could also have political ramifications, especially as he continues his bid for the Republican nomination in the 2024 presidential race.

Trump Media’s success is closely tied to Trump’s political fortunes. The company’s stock has shown volatility in response to developments in the presidential race, with Trump’s chances of winning having a direct impact on the stock’s value. If Trump sells his stake, it could be interpreted as a lack of confidence in his own political future, potentially undermining both his campaign and the company’s prospects.

Truth Social, the flagship product of TMTG, has faced challenges in generating traffic and advertising revenue, especially compared to established social media giants like X (formerly Twitter) and Facebook. Despite this, the company’s valuation has remained high, fueled by investor speculation on Trump’s political future. If Trump remains in the race and manages to secure the presidency, the value of his shares could increase. Conversely, any missteps on the campaign trail could have the opposite effect, further destabilizing the stock.

As the lockup period comes to an end, Trump faces a critical decision that could shape the future of both his personal finances and Truth Social. Whether he chooses to hold onto his shares or cash out, the outcome will likely have significant consequences for the company, its investors, and Trump’s political aspirations.

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Arizona man accused of social media threats to Trump is arrested

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Cochise County, AZ — Law enforcement officials in Arizona have apprehended Ronald Lee Syvrud, a 66-year-old resident of Cochise County, after a manhunt was launched following alleged death threats he made against former President Donald Trump. The threats reportedly surfaced in social media posts over the past two weeks, as Trump visited the US-Mexico border in Cochise County on Thursday.

Syvrud, who hails from Benson, Arizona, located about 50 miles southeast of Tucson, was captured by the Cochise County Sheriff’s Office on Thursday afternoon. The Sheriff’s Office confirmed his arrest, stating, “This subject has been taken into custody without incident.”

In addition to the alleged threats against Trump, Syvrud is wanted for multiple offences, including failure to register as a sex offender. He also faces several warrants in both Wisconsin and Arizona, including charges for driving under the influence and a felony hit-and-run.

The timing of the arrest coincided with Trump’s visit to Cochise County, where he toured the US-Mexico border. During his visit, Trump addressed the ongoing border issues and criticized his political rival, Democratic presidential nominee Kamala Harris, for what he described as lax immigration policies. When asked by reporters about the ongoing manhunt for Syvrud, Trump responded, “No, I have not heard that, but I am not that surprised and the reason is because I want to do things that are very bad for the bad guys.”

This incident marks the latest in a series of threats against political figures during the current election cycle. Just earlier this month, a 66-year-old Virginia man was arrested on suspicion of making death threats against Vice President Kamala Harris and other public officials.

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