The first half of 2024 has been an actual rollercoaster ride for Trump Media & Technology Group. Since the corporate behind Truth Social went public, its share price has fluctuated wildly – sometimes high as $66 per share, sometimes low as $22 – and caused the previous president’s wealth to rise and fall with him.
But in keeping with LinkedIn co-founder Reid Hoffman, these fluctuations are small in comparison with the big gap between Wall Street’s valuation of Trump Media and the corporate’s true value.
“Truth Social’s numbers are so absurdly far outside the realm of normal business,” Hoffman told CNN:referring to TMTG’s market value, which is currently around $6 billion. “That’s insanely high,” he said.
TMTG went public in March with a staggering market value of $6.8 billion, despite only reporting revenue of $4.1 million in 2023. (For comparison, when LinkedIn was acquired by Microsoft in 2016, it was valued at $26.2 billion, roughly eight times its $3 billion in revenue. Meta, which is valued at around $1.3 trillion, reported revenue of greater than $130 billion last 12 months.)
Hoffman, who’s now a director at Microsoft, told CNN that if Meta’s price-to-sales ratio matched TMTG’s, the social media giant could be valued at nearly $150 trillion.
The past few months have been rough for Trump Media. Within days of its IPO, its value shot up to almost $8 billion and its stock price rose sharply. But its value plummeted after the corporate announced it lost $58 million in 2023, dwarfing its total revenue for the 12 months.
In May, TMTG took one other hit when results showed the corporate lost over $300 million in the primary quarter of 2024, primarily because of its merger with Digital World Acquisition Corp. First-quarter revenue was also down year-over-year, coming in at lower than $775,000.
And as the corporate continues to lose money, there aren’t many opportunities to grow its audience. In February, Truth Social announced that it had about 9 million user signups across its platforms, making it tiny in comparison with giants like X and Snapchat, which have 550 million and 800 million monthly users, respectively.
More specifically, these signups generally represent the small faction of individuals online who’re ardent Trump supporters, which makes Truth Social not very attractive to anyone outside the MAGA movement. Earlier this 12 months, Michael Pachter, head of research at asset management firm Wedbush, said Assets He estimated that Truth Social had a maximum market of 75 million users, while it could need around 200 million to justify its valuation.
“Trump Media is probably valued closer to $40 million than multi-billion dollars,” Hoffman told CNN. “Truth Social is burning hundreds of millions of dollars without anything to show for it in terms of user engagement, user growth or even potential revenue.”
Hoffman, who has donated hundreds of thousands of dollars to President Joe Biden’s re-election campaign, is just not the primary expert to say Wall Street is overvaluing Truth Social. When TMTG first went public, Jay Ritter, an IPO specialist on the University of Florida, said the corporate was not at all price as much as its share price suggested and its price was “detached from fundamental value.”
Other investors have compared Trump Media, which trades under the ticker symbol DJT, to meme stocks like AMC and GameStop, where value is set by public sentiment on Reddit forums relatively than careful evaluation of the corporate’s performance and potential.
