Trump Media & Technology Group, the owner of Truth Social, has experienced a significant decline in its market value in recent weeks. Since May 30, the conservative social media company has seen its share price plummet by 48%, resulting in a loss of nearly $3 billion from former President Donald Trump's estimated net worth.
The company's stock, which has been volatile, dropped by 14% on Thursday alone. Despite this sharp decline, experts caution that Trump Media remains at risk of further losses due to its high valuation compared to its revenue generation.
In the first quarter, Trump Media reported revenue of just $770,500, highlighting its limited financial performance. Truth Social, the platform operated by Trump Media, lags behind major social media players like X (formerly Twitter), Reddit, and Instagram's Threads.
Some analysts have likened Trump Media to meme stocks such as GameStop and AMC, suggesting that its stock price is driven more by hype than underlying fundamentals. The recent approval from regulators for Trump Media to issue additional shares through warrants could further impact existing shareholders by diluting their holdings.
While the company sees the approval as a positive step to raise funds for potential investments in its platform and acquisitions, the move could exacerbate the stock's volatility. Trump, who holds a significant stake in the company, has seen the value of his shares decline substantially in a short period.
Despite the challenges facing Trump Media, the company's CEO remains optimistic about its future prospects, emphasizing plans to expand into TV streaming and enhance its platform. However, the ongoing concerns about the company's valuation and revenue generation continue to cast a shadow over its performance in the market.
