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Trump’s DJT stock creates a unique new ethical nightmare

  
Via:  TᵢG  •  4 months ago  •  25 comments

By:   Zachary B. Wolf, CNN

Trump’s DJT stock creates a unique new ethical nightmare
... the fundamentals of the company are not exactly stellar: “Trump Media generated just $3.4 million of revenue through the first nine months of last year, according to filings. The company lost $49 million over that span.”

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Critical Thinkers

Interesting analysis.   This is my take on it too.  

I am quite curious as to who is investing in this stock.


S E E D E D   C O N T E N T


The newly public company trading on the Nasdaq with the ticker “DJT” has one dominant shareholder: Donald John Trump, the cash-strapped former president of the United States.

That a fledgling, unprofitable social media platform can make the former president billions of dollars on paper is a marvel of the stock market. Trump can’t realize the windfall by selling his shares or borrowing against them for six months unless the company’s board, which is packed with his supporters, gives him the OK.

It probably can’t get Trump cash soon enough to make the drastically reduced $175 million bond he needs to post for the civil tax fraud charges levied on him and his other companies. Other penalties in that civil fraud decision, including the suspension of Trump’s ability to do business in New York, have been paused for now.

The fact that Trump’s newly public company makes little in the way of revenue and loses money should be fair warning to investors. In the meantime, he’s also trying to sell “God Bless the USA” Bibles via his social media platform Truth Social for $59.99.

Unprofitable and losing users


CNN’s Matt Egan points out that the fundamentals of the company are not exactly stellar: “Trump Media generated just $3.4 million of revenue through the first nine months of last year, according to filings. The company lost $49 million over that span.”

“My podcast makes a lot more money,” the tech journalist and CNN contributor Kara Swisher told Laura Coates on CNN on Monday.

Plus, the company’s main asset, Truth Social, has fewer than 500,000 monthly active users, far less than platforms like Facebook, X or TikTok, and Truth Social is losing more users than larger platforms and is losing users at a faster clip.

More from Egan: “For context, Reddit was only valued at $6.4 billion at its IPO last week – even though it generated 160 times more revenue than Trump Media. (Reddit hauled in $804 million in revenue in 2023, compared with Trump Media’s annualized revenue of about $5 million.)”

A history of bankruptcy


Another note of caution for investors in DJT should the history of the last company Trump took public .

Trump’s casino company also went by the ticker DJT, but on the New York Stock Exchange between 1995 and 2004, when it went bankrupt and was delisted. That was actually the third of Trump’s four business bankruptcies .

Note: When Trump was talking about the IPO for Trump Media & Technology Group after a court appearance in New York on Monday, he tried to explain why the company would be listed on Nasdaq instead of the NYSE. CNN’s Daniel Dale looked into that claim – something about how the NYSE is in New York – and found Trump’s explanation to make no sense , since Nasdaq is also located in New York.

A new ‘meme’ stock?


None of that has stopped what some experts have referred to as a bubble forming around the Trump Media & Technology Group. It is drawing comparisons to so-called “meme stocks” like GameStop and AMC, which were buoyed for a time by small individual retail investors who poured in so much money that the stocks rapidly outran the companies’ fundamentals.

Who is invested?


In the case of Trump, the stock could be inflated by his supporters, although the inverse could also true. If Trump unloaded his stock, it could plunge in value because his brand would no longer be associated with it.

The top institutional investor in the company is Susquehanna International Group. Its founder, Jeff Yass, is a major donor to Republican causes and also a major investor in ByteDance, the parent company of TikTok.

Yass and Trump actually met recently , just before Trump reversed his previous position in favor of requiring ByteDance to spin off TikTok. Trump said the subject of TikTok did not come up in his conversation with Yass. Susquehanna International Group did not return a request for comment about the company’s stake in Trump Media & Technology Group.

Jordan Libowitz is the communications director for the watchdog group Citizens for Responsibility and Ethics in Washington, and in a phone conversation, he wondered what might happen if foreign wealth funds that have interests in the US, like those associated with Saudi Arabia or Qatar, started buying large amounts of DJT stock.

Since so much of Trump’s wealth is now tied up in the company, those countries could theoretically have a direct impact on his bottom line.

“The value isn’t really in the company,” Libowitz argued, pointing to the company’s lackluster revenue. “It’s in the Trump name.”

Clear ethical issues


If Trump wins the White House again and a company bearing his initials are available, it could obviously be a venue for investors to curry favor. It would be an unprecedented situation, although not dissimilar to what happened when Trump was president.

While his company was not public during his first term in the White House, the use of his then-Washington, DC, hotel by foreign companies was the subject of lawsuits related to the Constitution’s Emoluments Clause, which bars the president from profiting from a foreign government.

Days after Trump left office, the Supreme Court threw out cases related to the Emoluments Clause because he was no longer in office.

While Trump no longer owns the DC hotel, the same ethical issues would present themselves if he returns to the White House. But while the effect of throwing business to a president’s hotel ends when someone checks out of their room, the relationship with investors can be much longer lasting.

Presidents are exempt from ethics law


Current law restricts every executive branch employee except the president from having investments that conflict with their job, Kedric Payne, senior director of ethics at the Campaign Legal Center, told me in a phone conversation.

It’s something Trump exploited when he said he gave control of his company, the Trump Organization, to his sons during his four years in the White House. Ethics experts balked at the lack of controls and transparency.

“It’s new facts, but the same old problem,” Payne said, adding that the volume of money involved could be much greater with a publicly traded company.

“Any action that he takes as president could benefit that company, and he would then have the benefit of the stock price,” Payne said.

Shortly after he was elected in 2016, Trump noted that presidents are exempt from ethics laws. “The president can’t have a conflict of interest,” he told The New York Times .

When these laws were written, according to Libowitz, nobody anticipated a president’s name being attached to a large, publicly traded company. That doesn’t mean previous presidents weren’t wealthy, but unlike Trump, they walled their investments off.

He’s doing the opposite, making his wealth synonymous with his name and inviting investors.


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TᵢG
Professor Principal
1  seeder  TᵢG    4 months ago
CNN’s Matt Egan points out that the fundamentals of the company are not exactly stellar: “Trump Media generated just $3.4 million of revenue through the first nine months of last year, according to filings. The company lost $49 million over that span.”

“My podcast makes a lot more money,” the tech journalist and CNN contributor Kara Swisher told Laura Coates on CNN on Monday.

Plus, the company’s main asset, Truth Social, has fewer than 500,000 monthly active users, far less than platforms like Facebook, X or TikTok, and Truth Social is losing more users than larger platforms and is losing users at a faster clip.

More from Egan: “For context, Reddit was only valued at $6.4 billion at its IPO last week – even though it generated 160 times more revenue than Trump Media. (Reddit hauled in $804 million in revenue in 2023, compared with Trump Media’s annualized revenue of about $5 million.)”

Indeed.   This will be an interesting stock to watch.

 
 
 
Krishna
Professor Expert
1.1  Krishna  replied to  TᵢG @1    4 months ago
CNN’s Matt Egan points out that the fundamentals of the company are not exactly stellar:

Sure, as a long term investment it sucks. But as a short term term there's money to be made-- even if the company sucks. 

Some people buying this are delusional Trump supporters who think he can do no wrong-- and hope to make money from it. But others might be doing it just as a way to contribute money to him. 

 
 
 
TᵢG
Professor Principal
1.1.1  seeder  TᵢG  replied to  Krishna @1.1    4 months ago

Its only long-term value is as a short.   IMO.

 
 
 
JohnRussell
Professor Principal
2  JohnRussell    4 months ago

Why don't we just throw his ass in jail and be done with it ?

This humongous jackass has put the country through enough already

 
 
 
Drinker of the Wry
Senior Expert
2.1  Drinker of the Wry  replied to  JohnRussell @2    4 months ago
Why don't we just throw his ass in jail and be done with it ?

Due process?

 
 
 
JohnRussell
Professor Principal
2.1.1  JohnRussell  replied to  Drinker of the Wry @2.1    4 months ago

His version of due process will last 20 years

 
 
 
Drinker of the Wry
Senior Expert
2.1.2  Drinker of the Wry  replied to  JohnRussell @2.1.1    4 months ago

Damn our judicial system.  

 
 
 
devangelical
Professor Principal
3  devangelical    4 months ago
I am quite curious as to who is investing in this stock.

fools. suckers. morons. true believers. sorry about the redundancy...

 
 
 
TᵢG
Professor Principal
3.1  seeder  TᵢG  replied to  devangelical @3    4 months ago

Well this stock certainly provides an interesting opportunity for the short transaction.

The key is watching the volatility.   Eventually the highly emotional investors (Trump supporters) will have made their many, little investments.   Those who are naively speculative (i.e. just buying because the stock was rising) will then fade away (and possibly start selling).   At some point (hard to predict) the more serious investors (mostly day and short-term traders) will conclude that the emotional exuberance has ended and they will start taking profits.   Then the shorts will trigger (this is a domino effect) and the stock could very well plummet.   That is, drop impressively.

The plummet will likely be followed by investors looking to acquire the golden DJT at a bargain.   But they will likely soon find out that after a bounce, the stock dropped yet again and this time even lower.   They might hold onto it (wishful thinking ... faith in Trump, whatever), but this stock could easily drop to single digits.

There is, after all, no intrinsic value in this company other than the Trump brand.   And there is no known business model that explains how this company is going to increase its market share by at the very least an order of magnitude (really it needs to grow 100-fold) to even get into the same game as the established players.

Bottom line, looks like a very good short opportunity.   The upside is far less likely than the downside.  But short sales are tricky too.

 
 
 
Gsquared
Professor Principal
3.1.1  Gsquared  replied to  TᵢG @3.1    4 months ago

Any investment advisor who would recommend this stock to the average investor should have their license pulled.

 
 
 
TᵢG
Professor Principal
3.1.2  seeder  TᵢG  replied to  Gsquared @3.1.1    4 months ago

10 days from now is another event.   Trump might work some deal to parlay future value of some of his DJT shares for cash today.   If so, that will be quite a negative blow for the stock.

I cannot imagine any sensible investor going for this unless Trump gives them a tremendous deal (e.g.  trade at 10% of current value).   Even then, I would not make that deal.

 
 
 
Gsquared
Professor Principal
3.1.3  Gsquared  replied to  TᵢG @3.1.2    4 months ago

It would be bordering on complete insanity to invest in any Trump-related business.  I would never.

 
 
 
TᵢG
Professor Principal
3.1.4  seeder  TᵢG  replied to  Gsquared @3.1.3    4 months ago

I know, amazing is it not?   No matter how terrible Trump's reputation there seems to be a new tranche of suckers waiting to be exploited.

 
 
 
Krishna
Professor Expert
3.1.5  Krishna  replied to  TᵢG @3.1    4 months ago
Well this stock certainly provides an interesting opportunity for the short transaction.

I was thinking of "day trading" it. Buying some early in the day. Probably many ardent Trump supporters would jump in and buy a lot, and it would probably keep going up-- then later in the day when its gone up a lot liquidate the position at a higher price.

Eventually Trump will liquidate his position (to pay his legal bills)-- in a day or two when his groupies have bid it up.  And stock would crash.

But the problem is daytrading it:  its impossible to know when Trump would liquidate-- and I could loose most of my investment if I exit too late.

So-- I didn't do it!

 
 
 
TᵢG
Professor Principal
3.1.6  seeder  TᵢG  replied to  Krishna @3.1.5    4 months ago

You cannot day trade on Trump's timing.   He will not be able to liquidate for 6 months.   The best you could do is try to time when the news is leaked that he has struck a deal on the future value of his shares (or something like that).   No way you will be able to do that.

Best you can do in day trading is to 'feel' the insecurity of the flow.   If it looks like the enthusiastic and naive investors have all participated then it would be a great time to exit.

I do not recommend day trading ... under any circumstances.

At best, see if the price stabilizes and then take a short position and be prepared to hold it for a while.

 
 
 
Krishna
Professor Expert
3.2  Krishna  replied to  devangelical @3    4 months ago
I am quite curious as to who is investing in this stock.
fools. suckers. morons. true believers.

Thank god for fools! (I've made a lot of money in the market because of them).

If everyone were intelligent and made decisions based on common sense, it would a lot harder to make money in the Stock Market!

P.S: There's a big difference between trading-- and investing (for the long term), Some very smart people are constantly making money trading lousy companies. 

 
 
 
Kavika
Professor Principal
4  Kavika     4 months ago

Here we go again, if the first time around wasn't enough of a fiasco we could have Fiasco II starring DJT as Walking Eagle.  

 
 
 
TᵢG
Professor Principal
4.1  seeder  TᵢG  replied to  Kavika @4    4 months ago

This time, however, if one is very careful, one might profit from Trump's misfortune.   To me it is near certainty that this stock price will drop considerably.   Timing is everything, but would it not be a thing of beauty to hold a fine short position as Trump watches his paper billions evaporate?

 
 
 
Kavika
Professor Principal
4.1.1  Kavika   replied to  TᵢG @4.1    4 months ago
Timing is everything, but would it not be a thing of beauty to hold a fine short position as Trump watches his paper billions evaporate?

Immensely enjoyable and well worth a super bucket of popcorn.

 
 
 
Gsquared
Professor Principal
4.1.2  Gsquared  replied to  TᵢG @4.1    4 months ago

If there is one thing Trump knows how to do, it's drive a business into bankruptcy.

 
 
 
Kavika
Professor Principal
4.1.3  Kavika   replied to  Gsquared @4.1.2    4 months ago

A five-time or is it six-time champion at bankruptcy.

 
 
 
Gsquared
Professor Principal
4.1.4  Gsquared  replied to  Kavika @4.1.3    4 months ago

Yeah, he's the best.  I wouldn't be surprised if he has taken his companies through more bsnkruptcies than anyone.  A real business genius.

 
 
 
Krishna
Professor Expert
4.1.5  Krishna  replied to  TᵢG @4.1    4 months ago
Timing is everything, but would it not be a thing of beauty to hold a fine short position as Trump watches his paper billions evaporate?

No need to go short.

A better strategy would be to buy some early on (In all likelihood Trump's fans will keep buying for a while-- bidding up the price-- then sell it all before Trump sells his holdings and crashes it.

Or you could sell Covered Call-- "in the money covered calls"-- collect a nice premium.

 
 
 
TᵢG
Professor Principal
4.1.6  seeder  TᵢG  replied to  Krishna @4.1.5    4 months ago
A better strategy would be to buy some early on ...

IMO that opportunity has past.

 
 
 
Igknorantzruls
Freshman Quiet
5  Igknorantzruls    4 months ago

Yass and Trump actually  met recently  , just before Trump reversed his previous position in favor of requiring ByteDance to spin off TikTok. Trump said the subject of TikTok did not come up in his conversation with Yass. Susquehanna International Group did not return a request for comment about the company’s stake in Trump Media & Technology Group"

.

It's ok, Trump said Tik Tok wasn;t discussed...

 
 

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