Trump Media shares jumped higher on Tuesday after the company said it has no debt and over $200 million of cash on hand.
Shares of Trump Media & Technology Group, trading under the ticker DJT, rose by around six percent Tuesday, partly reversing the 21 percent decline on Monday. Year-to-date, shares are up 198 percent.
Investors were also likely reassured that Donald Trump posted a $175 million bond in a civil fraud case without selling or pledging his shares. Trump has a nearly 60 percent stake in the parent of Truth Social. The bond allows Trump to appeal the civil verdict against him and will prevent New York state officials from seizing his assets to satisfy the judgment.
While the $7 billion market capitalization of TMTG has raised eyebrows among some investors and Trump critics, there is a long history of nascent technology startups with high valuations even as they were losing money. Facebook purchased Instagram for $1 billion of cash and shares before the company had any revenue.
Last year, the company had $4.1 million in revenue. The company has not disclosed the number of users on its Truth Social platform. Donald Trump has around seven million followers, which may be a good proxy for total subscribers. On Twitter, Trump has over 87 million subscribers, suggesting that Truth Social may have a lot of room for growth.
Critics argue that the current market value is inflated given the current size of the platform and last year’s revenue figures. Bullish investors view the social media space is ripe for disruption after years of consolidation around a few dominant platforms. Users and advertisers alike are seeking alternatives to the incumbent platforms, driven by concerns over privacy, censorship, and the homogenization of content, the company’s proponents argue.
Breitbart Business Digest has argued that TMTG can be seen as a bet that social media and digital platforms will fragment along political lines, similar to the changes in cable news in recent decades.
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