The fortune of former US President Donald Trump has taken a tumultuous turn, with far-reaching implications for his Truth Social platform and ongoing legal battles.
Trump has been removed from the global billionaire index following the crash of Truth Social’s stock, days after he joined the league as the social media platform hit more than $6 billion in market cap.
Trump’s exclusion from the Bloomberg Billionaire Index was attributed to the underperformance of Trump Media, the parent company of the Truth Social app.
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In a stark reflection of this downturn, the company’s share price experienced a sharp decline, plummeting by 8.57% in Wednesday’s trading session. This precipitous drop led to Trump Media’s market capitalization plummeting below $4.7 billion, a substantial departure from its valuation of $7.85 billion in March.
The magnitude of Trump Media’s share price decline, reflecting a month-to-date downturn of 44.71%, is believed to underscore the severity of the market’s response to recent developments. Despite Trump’s significant ownership stake of nearly 60%, the value of his holdings has dwindled to less than $2.7 billion as of Wednesday’s close, marking a stark contrast to its previous valuation of over $5 billion merely two weeks prior.
Compounding Trump’s financial woes are the legal challenges stemming from his media venture. Co-founders of Truth Social, Andy Litinsky and Wes Moss, have initiated legal action against the former president, alleging retaliation for their legal challenge regarding the value of their stake in the company.
Litinsky and Moss have achieved a notable victory in their legal battle, with a Delaware judge permitting them to augment their lawsuit with fresh claims of retaliatory measures by Trump, including the imposition of a restrictive six-month lockup period on their shares.
In stark contrast to Truth Social’s struggles, other players in the social media industry have witnessed varied performances. Meta’s shares have surged impressively, reflecting investor confidence and optimism in the company’s future trajectory.
However, Snapchat has experienced a downturn, indicating a challenging time for the platform amid intensified market competition and evolving consumer preferences.
Trump Media’s legal representatives contend that the lockup agreement is customary in blank-check transactions and push back against Litinsky and Moss’s legal maneuvering. They argue that premature liquidation of their shares would have detrimental effects on the company and its shareholders.
Despite the initial optimism surrounding Trump Media’s merger with Digital World Acquisition Corp, the company’s significant decline in value has raised concerns among investors. Trump’s substantial stake in the company, coupled with ongoing legal battles, paints a complex picture of the company’s prospects and Trump’s financial standing.
Trump’s financial difficulties have broader implications beyond his personal wealth, affecting the operational sustainability of Truth Social. The platform’s recent crash highlights the hurdles Trump Media faces in the fiercely competitive social media arena. Trump’s ambitions to position Truth Social as a competitor to established platforms such as Meta’s Facebook and Twitter have been met with skepticism.
During an interview with CNBC earlier this month, Barry Diller, Chairman of IAC and Expedia, didn’t hold back, describing Trump Media as “a scam” and lambasting investors in its stock as “dopes.”
Diller’s blunt criticism arises from concerns regarding the company’s substantial valuation despite its lack of revenue.
“It’s ridiculous,” Diller exclaimed on CNBC’s “Squawk Box,” adding, “The company has no revenue. It’s a scam, just like everything he’s ever been involved in is some sort of con,” in reference to Trump.