Donald J. The huge surge in shares of DJT, the stock symbol of Trump’s social media company Truth Social, has been described by me and others as a meme-inspired phenomenon.
The stock is buoyed by what some might say is an irrational degree of excitement that Trump will win the presidential election — which in turn, either way, will be great for the bottom line of a money-losing platform that faces stiff competition. Will face more difficulties. What will be the business environment whether Trump takes the White House or not?
But On the Money reveals that for some traders there may be a better reason. are buying — and probably keep the stock intact — even if Trump loses on Tuesday.
People inside the Trump camp have been speculating for weeks that Truth Social would get involved at some point, perhaps sooner rather than later. Mega-MAGA is supporting Elon Muskand their own social media platform X, formerly known as Twitter.
Full disclosure: I have not confirmed the speculation with anyone in a position to make the deal happen – neither Musk nor Trump himself – both of whom are a bit busy these days trying to get Donald re-elected as leader of the free world. Are busy.
Musk’s lawyers and the Truth Social faction did not comment.
But there’s certainly talk around Trump World, including from people hanging around Mar-a-Lago, that Musk is eyeing Truth Social in the context of some kind of combination with X.
The deal is certainly cheap. Breaking up two separate entities, and setting a price to make everyone happy is a different story. Will Truth Social be a micro-blogging subsidiary of X? Is it fully occupied?
And how much is Truth Social really worth? DJT shares have surged more than 230% in the past month, boosting its market cap to $10.6 billion, leaving it worth about $7 billion after the selloff. Volatility is difficult to value.
Yes, but doesn’t Elon have unlimited money to do whatever he wants? He is the richest man in the world with a net worth of $300 billion.
But most of it is in the stock of Tesla, the EV company run by him. he will have to sell shares to buy djtWhich will probably anger Tesla stockholders who have endured share price fluctuations and finally seen some extended profits over the past year.
Recall: Musk overpaid for Twitter in 2022, paying $44 billion for something that was probably worth closer to $4 billion, at least on paper. Twitter barely surpasses 200 million daily users. Truth Social lost a lot of money, $160 million, in the second quarter and has only a fraction of the daily users.
Like most good businessmen, Musk hates being overpaid. That’s why, after the initial excitement of buying Twitter and freeing it from the woke forces of former management, he tried (in vain) to back out of the deal.
Is he willing to pay $10 billion, and perhaps a premium, depending on where the shares settle, for something that might be worth $10 on paper, is it because of the MAGA-craze? The reason DJT wasn’t setting stocks on fire?
Maybe think about it. Remember, Musk is now part of the MAGA loyalists, and if Trump becomes president he’ll have an even better friend in the White House to support his various ambitions that include government contracts for space travel and who knows what else. What else.
And if Trump loses, what would an extra $10 billion be worth to a man worth $300 billion?
