Former President Donald Trump’s wealth has taken a significant hit, dropping by a staggering $4 billion. This decline is tied to the struggling performance of Trump Media & Technology Group (TMTG), which operates Truth Social, his social media platform.
In March, TMTG’s market debut boosted Trump’s fortune to over $6 billion. However, by September, his wealth had dwindled to below $2 billion, due to a 70% drop in the stock price. Trump, holding about 60% of the company, experienced the largest losses.
What Led to the Decline?
Several factors contributed to TMTG’s sharp decline. First, the company’s stock price fell drastically as revenue failed to grow, and the business remained unprofitable. In the second quarter of 2024, TMTG’s revenue shrank by 30%, down to $836,900, and the company reported a $16.4 million loss, though slightly improved from last year. Additionally, Truth Social struggled to attract advertisers, relying mainly on a core base of Trump supporters but lacking mainstream appeal.
The Meme Stock Effect
TMTG’s stock has been influenced heavily by its meme-stock behavior, similar to companies like GameStop. Driven by social media buzz rather than financial fundamentals, TMTG’s stock has seen wild fluctuations. When Trump was involved in key political moments, like an assassination attempt in July, the stock briefly surged. However, political uncertainty, including President Biden’s potential replacement by Vice President Kamala Harris, also played a role in the stock’s volatility.
Expiring Lockup Period
Adding to the uncertainty is the upcoming expiration of a lockup provision that has prevented Trump and insiders from selling shares since the company’s public debut. This restriction ends on September 19, and the potential for large share sales could further impact the stock’s value.
Retail Investors Express Concern
Many of Trump’s supporters, who make up a significant portion of retail investors in TMTG, have flocked to Truth Social to voice their concerns. Some blame short sellers for the declining share price, though analysts have noted that the recent drop is due to long selling rather than short selling.
In conclusion, Donald Trump faces a significant financial challenge as his media venture stumbles. Whether he will sell shares when the lockup expires or try to revive the company’s fortunes remains uncertain. The volatile nature of TMTG’s stock and its revenue struggles have created a difficult road ahead for the former president and his media empire.