Before it went public, Donald Trump's Truth Social was bleeding money, with fewer users using it on a daily basis. However, once it merged with Digital World Acquisition Corp. and went public, stocks soared. Currently being traded as DJT, it is currently considered a meme stock, and as meme stocks go, experts are warning it will all go crashing down.

Donald Trump's namesake social media company, the Trump Media & Technology Group, started out strong during its first day of trading Tuesday. It opened at $70.90 and soared as high as $79.38, with Trump supporters helping drive the stock price up.

Despite struggling in its operations, the company has been valued at over $8 billion, also boosting the former president's net worth as he owns the majority of the shares. This has baffled experts because Truth Social "has struggled to attract users and advertisers, burned through cash and wracked up losses," according to USA Today.

University of Florida professor Jay Ritter is one of the experts baffled at this and he told the outlet, "The valuation of the company should be several hundred million, not the billions it is currently valued at."

"The stock will continue to be very volatile, with sharp moves up and down. But the long-term trend will be down," the financial expert warned. "The company has about $2 in cash per share, but it will probably burn through that money and the most likely outcome is eventual bankruptcy."

This was not the first time a Trump business under a vanity ticker failed, as he previously used one Atlantic City casino business, Trump Hotels and Casino Resorts. It went public in 1995 but never turned a profit. The company ended up declaring bankruptcy in 2004.

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Experts Questioning Why Donald Trump's Truth Social Is Worth Over $8 Billion

Market experts are still scratching their heads as to why DJT is worth that much. However, The Guardian pointed out that this is because the company's investigators, mostly Trump supporters, do not care about the fundamentals of investing and many are buying it as a "meme stock."

These investors also do not care about the company losing more money than it made last year, recording a loss of $49 million while only earning $3.3 million from advertising alone. The stock's price is currently in a bubble and the stock's prices might crash soon as it is seen as a volatile company to invest in.

Donald Trump's Truth Social Business Not Worth That Much and Would Not Likely Profit, Says Expert

Jay Ritter, a respected finance professor at the University of Florida's Warrington College of Business, also spoke with CNN and warned that Truth Social will not be very profitable and might even cost investors.

"The underlying business doesn't seem to be worth much. There is no evidence this is going to become a large, highly profitable company," he warned. "I'm reasonably confident the stock price will eventually drop to $2 a share and could even go below that if the company blows through the money it got from the merger."

The example of Reddit was used, as the company was valued at 6.4 million, which is less than what Truth Social is worth right now. However, unlike the Donald Trump social media company, it earned $804 million in revenue in 2023, a lot more than Truth Social's meager $5 million earnings last year.

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This article is owned by Latin Post.

Written by: Rick Martin

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