CNN news reporter here with an update on the valuation of Trump Media & Technology Group, the conservative social media company owned by former President Donald Trump. Despite a recent drop in share price, Wall Street values the company at a staggering $6 billion. Reid Hoffman, director at Microsoft and a venture capital investor, expressed shock at this valuation, calling it “wildly high” and “absurdly out of the realm of normal business.”
Shares of Trump Media surged more than 20% on Monday, marking its second-best trading day since its debut on the Nasdaq in March. However, the company’s revenue remains minimal compared to industry giants like Meta Platforms, owner of Facebook and Instagram. In 2023, Trump Media only brought in $4.1 million in revenue, leading to an astronomical price-to-sales ratio of over 1,400.
Hoffman, a vocal critic of Trump, believes that Trump Media is more realistically valued at around $40 million instead of billions. He noted that the company is not showing any signs of user engagement, growth, or potential revenue. Despite the skepticism from experts like Hoffman and billionaire media mogul Barry Diller, Trump Media continues to attract investors and maintain its multibillion-dollar valuation.
The recent fluctuations in Trump Media’s share price were attributed to Trump’s legal troubles and his conviction on felony charges. The company’s market value halved between May 30 and last week before bouncing back on Monday. Trump Media also disclosed that it expects to raise over $69 million from investors exercising warrants to buy common stock.
Analysts have described Trump Media as a “meme stock,” driven more by hype and social media sentiment than actual fundamentals. Some believe that investors are holding onto the stock in anticipation of Trump’s potential return to the White House, leading to a spike in the company’s valuation. Hoffman speculated that influential individuals or governments may be artificially propping up the value of Trump’s stake in the company.
Despite the controversy surrounding Trump Media’s valuation, Trump’s 114.75 million shares in the company are currently valued at nearly $4 billion, down from $6 billion in May but up from $3 billion last week. The market continues to value Trump Media in the billions, reflecting the ongoing interest and speculation surrounding the company’s future.
