The Bitter Truth: Investing in Trump’s Truth Social


The weird financial logic that led to the stock market debut of Trump Media & Technology Group, ticker symbol DJT, originated more than 400 years ago with tulips. In the early 1600s, Dutch investors couldn’t get enough tulips, select bulbs of which vaulted to prices greater than that of a modest home, before falling back to earth.

Fast-forward to the 1980s, and the seeds of a new kind of tulip mania, of which DJT is the latest example, emerged courtesy of L’eggs. Peter Lynch, wunderkind fund manager at Fidelity Investments, unintentionally democratized investing by making oversized returns from L’eggs stock after his wife mentioned how clever the pantyhose packaging was. Lynch’s success led many to question the need for stiff-shirt Wall Streeters to tell you where to put your money. Why waste time analyzing company debt/equity ratios, cash flows, competitive positioning or earnings growth prospects, when you could get rich on your own gut instincts and wits!

This rebellion had some salutary effects. Investors gained by having more control of their portfolios. Research grew more accessible. Trading stocks and funds was easy, and at lower commission rates. But it was a set-up for tulip mania 2.0.

That emerged a decade later when armies of day traders began flipping stocks like flapjacks. Some scored, but many lost it all when the dot-com bubble eventually burst. But it was a fun ride, right? After all, why invest $10,000 in a boring stock index at an average historic 10 percent return rate to end up with just $174,000 thirty years later, when you could have fun and excitement riding the speculator roller coaster?

Financial product engineers took note, rising to the occasion. Enter crypto and virtual investments. Crypto investments had a good run before a string of total bankruptcy losses in 2022, including the flame-out of FTX, Celsius Network, BlockFi and others. Some made money in crypto, others lost it all.

Then a few years ago, Digital Non-Fungible tokens (NFTs) became the rage, attracting tens of billions of dollars from next-gen speculators. There’s even an NFT Museum by the Pike Place Market in Seattle if you want to see virtual investments on the wall! An NFT cartoon image from the “Bored Ape” digital collection fetched $3.4 million in 2022. But the collection lost about 90 percent of its value from recent peaks. Not to worry! Owners still had those special perks, like invitations to join other Ape investors at parties in Singapore.

In 2021, meme stocks GameStop and AMC Entertainment caught fire with the help of social media fuel, before crashing and burning. The former is off about 90 percent from highs, the latter down over 99 percent, from $726 a share to under $3.

And then came SPACs, Special Purpose Acquisition Companies – blank-check shell companies that buy corporations with investors’ funds and take the shells public in the stock market with minimal regulation. But their overall performance record has been dismal, with many losing much or all of investors’ funds.

Enter Trump Media & Technology Group, formed when SPAC Digital World Acquisition Corp. purchased the ex-president’s media company last spring. Offered at an initial price of $50 a share, DJT stock immediately spiked to almost $80, then collapsed to just over $20. It now sits somewhere in between, with a market valuation of around $6 billion.

But DJT’s true value varies dramatically, depending on your assumptions. Based on economic fundamentals – the traditional measure of stocks – its value is far below its latest price. Despite the ex-president’s celebrity draw, DJT (the company) only generates the revenue of a typical Chipotle restaurant. It burns through cash, as evidenced by a reported $58 million operating loss last year.

DJT’s auditing firm said the company’s “operating losses raise substantial doubt about its ability to continue as a going concern.” Its accounting net worth – book value of assets minus liabilities — is minus $64 million. And barring a friendly block sale transaction with the likes of the Saudi Wealth Fund or a sympathetic American billionaire, DJT insiders and the cash-strapped ex-president will likely unload some of their large holdings, pressuring the stock. Given these factors, the company is probably fundamentally worth well under $1 billion, suggesting a single-digit stock price, and a stock sell-off.

But there’s another scenario for speculators. What if the “Ex” is re-elected? In that case, the stock could be a bargain! Imagine a very possible scenario in which the re-elected Ex declares DJT the official Federal Government Executive media channel. He could follow the roadmap of a certain European leader who in 1933 created a Minister of Propaganda to control and shape information flow according to his desired alternate reality. Steve Bannon or Stephen Miller would fit the bill.

Imagine advertisers lining up for the opportunity to gain favor with the Ex, driving up DJT company revenues, adding billions to the Ex’s paper net worth. He could channel cash flows into building a walled executive palace, conveniently near Mar A Lago, modeled after Buckingham Palace or the Russian or Hungarian executive palaces. Jared could pitch in, pressuring the Saudis for contributions to finance the palatial, gold-plated Olympic-size pool.

For good measure, the Ex could follow the lead of Southern governors and declare a legal war on investing in beneficial environmental, social, and governance funds (sometimes referred to as ESG funds) and attract money from oil and gas and firearms organizations. That could finance the gold-plating of palatial vanities and toilets. Further, it would be advantageous to ignore the societal and investor benefits of ESG principles and funds. After all, a political assault on the ESG industry would boost political points with the base, and fatten the coffers of the Ex.

So who are you – an investor or a speculator? And which scenario do you buy into: a fundamental long-term valuation approach or a dystopian speculator view? Between DraftKings commercials, which buttons would you click?

Jim Margard
Jim Margard
Jim Margard is a retired entrepreneurial investment manager, founder and partner of Rainier Investment Management, and a Chartered Financial Analyst. He serves on the Finance Committee of the Pike Place Market Foundation and resides at First and Union.


  1. This is a very handy review of recent investing manias, with a nod to the famous Dutch Tulip mania, which was at least based on the concept of investing in “real stuff” (exotic tulip bulbs) instead of dubious schemes such as Trump Media, NFTs and crypto, the favored exchange medium of crooked regimes and mobsters everywhere.
    I’m hopeful that re-electing Joe Biden will cause DJT (the stock) to lose its luster, though I feel sorry for the supporters of DJT (the orange guy) who put their money on the line for a con-man. But, “a Fool and his money are soon parted” is as true now as it was when first uttered.


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