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The newly listed company, which trades 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 new, unprofitable social media platform can make the former president billions of dollars on paper is a stock market miracle. Trump cannot realize the windfall by selling his shares or borrowing against them for six months, unless the company’s board, which is full of his supporters, gives him permission.

It likely won’t raise money quickly enough for Trump to pay the drastically reduced $175 million bail he must post on the civil tax fraud charges against 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 temporarily suspended.

The fact that Trump’s new publicly traded company is generating little revenue and losing money should be fair warning to investors. In the meantime, he is also trying to sell “God Bless the USA” Bibles through his social media platform Truth Social for $59.99.

Unprofitable and losing users

CNN’s Matt Egan points out that the company’s fundamentals aren’t exactly great: “Trump Media generated just $3.4 million in revenue in the first nine months of last year, according to the filings. The company lost $49 million during that period.”

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

Additionally, the company’s main asset, Truth Social, has fewer than 500,000 active users per month, far fewer than platforms like Facebook,

More from Egan: “For context, Reddit was only valued at $6.4 billion when it went public last week — even though it generated 160 times more revenue than Trump Media. (Reddit generated $804 million in revenue in 2023, compared to Trump Media’s annual revenue of about $5 million.)”

Another warning for DJT investors should be the history of the last company Trump made public.

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

Note: When Trump talked about the Trump Media & Technology Group IPO after an appearance in New York on Monday, he tried to explain why the company would be listed on the 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 meaningless, since Nasdaq is also based in New York.

None of this has stopped a bubble from forming around Trump Media & Technology Group. It draws comparisons to so-called “meme stocks” like GameStop and AMC, which for a time were backed by small individual retail investors who poured so much money into them that the shares quickly surpassed the companies’ fundamentals.

In Trump’s case, the stocks could be inflated by his supporters, although the reverse could also be true. If Trump were to sell his stock, it could drop in value because his brand would no longer be associated with it.

The main 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, TikTok’s parent company.

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

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

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

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

If Trump wins the White House again and a company with his initials is available, this could obviously be an opportunity for investors to curry favor. It would be an unprecedented situation, although not much different from what happened when Trump was president.

Although his business 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 prohibits the president from profiting from foreign investments . government.

Days after Trump left office, the Supreme Court dismissed cases involving the emoluments clause because he was no longer in office.

Although Trump no longer owns the DC hotel, the same ethical issues would arise if he returns to the White House. But while the effect of throwing business at a president’s hotel ends once someone checks out of their room, the relationship with investors can last much longer.

Current law prohibits any executive branch employee other than the president from making investments that conflict with their jobs, Kedric Payne, senior director of ethics at the Campaign Legal Center, told me in a phone call.

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

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

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

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

When these laws were drafted, Libowitz says no one expected a president’s name to be linked to a major, publicly traded company. That doesn’t mean previous presidents weren’t wealthy, but unlike Trump, they shielded their investments.

He does the opposite, makes his wealth synonymous with his name and invites investors.

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