With no time left to spare before New York Attorney General Letitia James tried to fine Donald Trump nearly half a billion dollars over her farcical anti-fraud crusade, the former president was handed two lifelines. First, an appeals court massively slashed Teflon Don’s required payment to a $175 million bond. Second, and perhaps more consequentially, the first Trump property in almost 30 years went public, with Trump Media & Technology Group trading on the Nasdaq composite under the ticker $DJT.
Merging with Digital World Acquisition Corp., a special purpose acquisition company designed to take Trump’s Truth Social public, March 25’s launch of TMTG was an effective IPO for the social media platform. In the post-pandemic economy, when the Federal Reserve’s monetary tightening has slaughtered scores of supposed tech unicorns dependent on the long-gone days of easy money, it’s impossible to characterize Truth Social’s IPO as anything less than a blockbuster.
In its first day of trading, TMTG stock closed at 16% higher than its opening position, with a total market capitalization of about $8 billion. Given Trump’s 60% stake in the company, Trump’s personal net worth nearly doubled, catapulting the Republican, whose vast real estate holdings previously comprised the bulk of his wealth, to Bloomberg’s wealthiest 500 billionaires list for the first time in his career. Just a week after James taunted Trump with threats of seizing his own marquee properties, such as Fifth Avenue’s Trump Tower, Trump is now theoretically flush with cash should he need actually to settle up his much-shrunk bond.
Trump’s haters have typically cried foul on Truth Social’s valuation. As though market speculation were a novel concept relegated to “meme stocks” rather than the basis of every stock market exchange since the West blew up its gold standards, naysayers at Axios and the Guardian pilloried TMTG’s IPO for relying on “Trump-related sentiment” rather than “fundamentals.”
“But unlike [AMC and GameStop] shareholders, there is little sense that the Truth Social investors are driven by, or even care about, turning a profit on their stake,” Alex Hern at the Guardian laments of the “loss-making” enterprise. “Instead, buying in is seen as a chance to invest in Trump — or even just to show your support for the man.”
Ironically enough, the media meltdown over Truth Social’s valuation highlights not just the limitations of the legal warfare against Trump’s businesses, but also why James’s case was economically egregious in the first place.
Unlike Trump’s storied real estate empire, Truth Social is still in its entrepreneurial infancy. It only generated $3.4 million in revenue in the first nine months of 2023, netting a $49 million loss, and has just 5 million monthly active users, compared to 215 million on X.
But just as Trump voters will crawl over broken glass to vote for him, even at the expense of down-ballot candidates who fail to toe the MAGA line, Truth Social’s users and investors are true believers. The product is fine — since Elon Musk purchased Twitter, it’s hard to argue that Truth Social’s user interface is any worse than the former social media giant — but the meaning of the investment is its momentum. If Trump wins his third presidential bid, he could pump the stock’s valuation for four straight years by continuing to use his platform as his primary means of public communication. Every journalist in the country will be begrudgingly and unwittingly making the billionaire even richer. And compare Truth Social to the loss-generating histories of Uber, Amazon, and Facebook, and it’s not hard to see the sell that Truth Social will map a similar, just less steep scale, at least for a time.
Truth Social’s success proves the fundamental folly in James’s fraud case. Whereas publicly traded companies give investors a precise valuation of a firm at any given moment in time, a privately traded enterprise, especially in the vicissitudes of real estate, is subject to fluctuations in demand, supply, local zoning laws, monetary policy, and broader fiscal outlooks. The countervailing interests of lines of credit and tax liabilities incentivize property owners to be honest in their assessments of values, but there’s little question that the Trump moniker puts a premium on Trump’s already luxurious properties.
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Say what you will about Trump’s style, but Mar-a-Lago has a direct point of comparison to The Breakers, while Trump Tower has dozens of reference points across midtown Manhattan. Beyond the stupidity that not one investor has claimed they were defrauded by Trump’s real estate valuations, there is the simple matter that just by nature of Trump properties’ association with the most famous man on the planet puts an inherent floor in the value of any brand with which he’s in business.
The legal movement shows little sign of continuing its Faustian bet of eliminating Trump from the 2024 election through the courts, but he has likely outlasted the worst of the threats of the criminal trials, which likely will not reach a conviction before Election Day and probably cannot touch him while he would serve a second presidential term. If they want to continue to come after his cash, Truth Social’s blockbuster IPO proves that he can continue to out-earn his prosecutors if only by his own branding.