Trump Media is now a company. But is it a business?
The Facts
Susquehanna International Group makes its money buying and selling stocks in milliseconds, eking out fractions of a penny each time. At one millisecond at the end of last year, its holdings included a 2% stake in a blank-check company that this week merged with Donald Trump’s social-media company.
That has fed theories that Susquehanna’s founder, Republican mega-donor Jeff Yass, is funneling money to a cash-strapped Trump by pumping up shares of a company that began trading today under the ticker DJT and owns Truth Social, where Trump has spent most of his online time since being kicked off Twitter after Jan. 6, 2021.
It’s a fun theory for this conspiracy-happy age. But Susquehanna told The New York Times that it was neutral on the stock and owned other securities — likely options, where it’s one of the biggest players in the world — that offset its holdings. That tracks with Susquehanna’s business not as a discerner of value but as a supplier of bids and offers that occasionally ends up with some inventory.
Digital World, the blank-check company that merged with Trump Media & Technology Group, has been especially attractive to algorithmic market-makers and quant funds as a measure of the mood of Trump supporters. Quantitative traders love retail trading because it’s uninformed by, and generally unrelated to, big macro trends.
(Susquehanna also has a private-equity and venture-capital arm, which is where it owns a large stake in TikTok. Trump’s recently softened stance on a TikTok ban has fueled still more theories about Yass’s influence.)
Liz’s view
Underlying the speculation about Yass is broad puzzlement about why would buy shares in Trump Media & Technology Group. The company has lost at least $57 million since its inception in 2021; has said it won’t release user data, the key metric for mainstream social-media companies; and has a single product, which not that many people use. It also had to refile its financial statements with the Securities and Exchange Commission after it put its revenue in the wrong line in an Excel spreadsheet.
This company is obviously overvalued by any traditional Wall Street yardstick. Shares of Disney, to which Trump has compared his company’s ambitions, trade around 15 times its earnings. Trump Media opened today with a market value of $9.5 billion, which suggests investors expect $600 million in earnings over the coming year.
Trump Media lost $50 million in the first nine months of last year, according to barebones financial data from the company. Its model is that of a mid-2010s social-media platform: charging advertisers to get in front of users. While they manage to fill ad space, many blue chip advertisers have steered clear of X and certain programming hours of Fox News out of a fear of damaging their brands by association with questionable content.
More broadly, the enthusiasm that accompanied the launch of Rumble, Parler, and other social-media companies catering to conservatives never translated into user engagement. It turns out right-wing social media enthusiasm thrives on conflict — and the system breaks down when there aren’t libs to own.
Room for Disagreement
Trump Media overcame wildly long odds to get here. Its journey to the public markets overcame a clear violation of securities laws, unrelated insider-trading charges against one of Digital World’s directors, an app launch riddled with technical outages, the repeated indictment of its largest shareholder, accounting lapses that required it to refile its financial statements, and the collapse of the SPAC craze around it.
That suggests an alternate source of fuel: “$DWAC isn’t a stock, it’s a religion,” one Redditor writes.
Notable
For a deeper dive into the finances of Trump’s media company, this government filing will tell you how much it spent on R&D and other tidbits.
