Overvalued and ready to sell some shares while the getting is good. Trump’s Truth Social reveals $58m loss as auditor raises doubts about viability. Shares dropped by as much as 25% as investors scrutinize fundamentals of company’s business.
@MaryLTrump: “There is no universe in which a company with annual revenue of $4.1 million in revenue and LOST $58 million in one year is worth $10 billion. The Trump media merger with Digital World Acquisition was meant to be a massive infusion of cash to Donald--a gift masquerading as an investment. 1:43 PM · Apr 1, 2024”
The figures underscore why some experts warn Trump Media’s multibillion-dollar valuation defies logic and is reminiscent of the meme stock craze.
In a regulatory filing on Monday, Trump Media said it lost $58.2 million in 2023, compared with a profit of $50.5 million in 2022.
The Truth Social owner generated just $4.1 million in revenue, although that was up from $1.5 million in 2022.
Not only that, but revenue tumbled 39% year-over-year in the fourth quarter to just $751,500. That’s not what investors want to see from any start-up, especially one valued at these levels.
Shares of Trump Media tumbled 24% Monday afternoon following the new filings, though they are still up nearly 200% so far this year.
The losses are so severe that Trump Media’s accountants warned they “raise substantial doubt about its ability to continue as a going concern,” which is Wall Street for: We may not be able to stay in business. That warning echoes one made in November when accountants said Trump Media might not survive unless it soon completes its merger to go public.
That long-delayed deal was completed last week, paving the way for Trump Media to receive an influx of approximately $300 million in cash. The company can now use those funds to pay down debt and, importantly, build out its infrastructure.
www.cnn.com/...
Some meme stocks have often become popular among retail investors after being targeted by short-selling professional investors, such as hedge funds,[21][22][23] with participants having the explicit aim of causing losses among those firms.[21][23] News coverage has described the choice to purchase such stocks as an act of rebellion intended to humble short-selling professional investors.[24]
A telling little clip from Mediate, where TV financial pundit Jim Cramer is basically urging Trump to cash in his chips, relinquish control or at least partial control and get a big fat payday. In theory, that sounds like sound advice. One small problem with that is what he's advocating is not technically legal. Trump would have to get special permission to do that as lock-up restrictions for six months prevent him from selling or borrowing against his shareholding.
How a company that brought in just $4.6mil in revenue over the last year can get a starting valuation of $6 billion (and is currently over $9 billion) is one of life's mysteries. Meme stock, indeed.
crooksandliars.com/...
- NYT: Big Republican Donor Jeff Yass Owned Shares in Trump Media Merger Partner
- BBC: Trump poised for billions as stock market deal passes
- Business Insider: Trump risks tanking Truth Social’s stock price if he cashes out
- Unknown company: If you've never heard of the company and it's suddenly experiencing a surge in trading, be cautious. Research the company's background, what they do, and their financial history.
- Unsolicited recommendations: Getting spammy emails or social media messages hyping up a stock is a major red flag. Legitimate investment opportunities typically don't rely on pushy tactics.
- Unusual trading activity: Look for sudden spikes in trading volume with no corresponding news or developments about the company. This could be a sign of manipulators buying up shares to inflate the price.
- Volatile stock price: If the stock price is swinging wildly up and down in a short period, it could be a sign of a pump-and-dump scheme.
- Limited financial information: Be wary of companies with scant financial information available. It can be a sign they're trying to hide something.
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