Despite generating minimal revenue and operating at a loss, Trump Media & Technology Group is experiencing a dramatic surge in value.
Wall Street now values the company at nearly $8 billion, a price tag that has tripled in just five weeks, CNN reported.
Market analysts attribute this surge to speculation that former President Donald Trump will win the 2024 presidential election.
Trump Media & Technology Group’s (TMTG) stock is acting more like a meme stock, trading not on financial performance but hype and momentum linked to Trump’s political fortunes.
“This company’s value is almost entirely based on the outcome of the election,” said Gene Munster, co-founder of Deepwater Asset Management. With Trump as the dominant shareholder, his 114.75 million shares are now worth about $4.5 billion — up significantly from $1.4 billion last month.
Analysts say that Trump Media’s fundamentals offer little to justify its valuation.
The company’s second-quarter revenue was a modest $837,000, typically corresponding to a valuation in the millions, not billions.
Munster describes the situation as a “binary outcome,” noting that if Trump wins the presidency, the stock’s value will rise further, but a loss could trigger a sharp sell-off.
TMTG is currently trading at an extraordinary 1,600 times its enterprise value.
George Kailas, CEO of Prospero.ai, likens it to a classic meme stock driven by social sentiment rather than business fundamentals.
“People are wagering with their hearts,” Kailas said, adding that there’s no clear path for the company to justify its valuation without political success.
The volatility of TMTG’s stock reflects the uncertainty of the election.
The company’s shares dropped sharply in July after Joe Biden ended his reelection campaign, signaling a tough road for Trump. However, with Trump now locked in a close race against Kamala Harris, the stock has rebounded, suggesting traders are betting on a possible return to the White House.
If Trump wins, analysts believe Truth Social, TMTG’s flagship platform, could become a key tool for presidential communication, boosting the company’s prospects.
However, if Trump loses, Munster and Interactive Brokers strategist Steve Sosnick warns that the stock could plummet, erasing recent gains and leaving TMTG’s valuation in freefall.
The article was written with the assistance of artificial intelligence.