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Trump Media & Technology Group Corp--Ticker: DJT--keeps going up despite predictions from as far as a year ago about how it it's running out of money. The rapid stock price appreciation over the past 3 months, from as low at $13 to $33, has has caught many short-sellers by surprise, and shows no sign of slowing.
There are a few ways of looking at this:
DJT stock is mostly a proxy for Trump's odds. People are buying DJT stock as a bet on Trump winning. DJT stock has superior liquidity, more possible upside, and less counterparty risk compared to prediction markets. The actual business is less relevant , although Trump Media should get a tailwind from Trump winning in terms of increased traffic and ad revenue to Truth Social and other Trump properties. Cryptocurrency, however, which should also stand to benefit from a Trump win, has seen much weaker price action compared to DJT this week. DJT was up 10% whereas bitcoin was down, suggesting DJT's price action is not entirety a stand-in for his odds, or that other factors are at play, like short covering.
In a blog post, I entertain a completely overlooked possibility: Trump media benefits from free advertising from the Trump brand itself more so than than if he wins or not. Even after losing in 2020, Trump was in the news constantly, or his sons or other family were. Advertising is one of the biggest expenses of any business. Trump gets, by my estimate, hundreds of millions of dollars of free marketing just by existing. This has to be worth something in the context of valuation.
Trump Media can launch a product or enter into a partnership, and the most expensive part--advertising for the userbase acquisition--is instantly covered at no cost. Trump's fans (or Republicans ,in general, or the overlap between Elon's fans and Trump's base) are the users, and the media's coverage (plus Twitter; Trump has the second-most popular account second to the CEO himself) is the marketing. All of it is free. Truth Social has not big a huge success, admittedly, but the market is likely pricing in additional pivots and partnership that should be bigger.
I predict there will be something involving Elon that leverages X/Twitter userbase or something like that. Trump also has his own personal conglomerate, The Trump Organization, which according to Wiki has $600 million in annual earnings. It's possible The Trump Organization can merge or go public under DJT, effectively combining the two under the same ticker. Although, being public, this would bring scrutiny to his business dealings that Trump may want to avoid.
In the context of efficient markets, if DJT were really on a collision course with insolvency as the media claims or as expected, it would be priced more appropriately, closer to zero instead of $33, so there is probably something up. It reminds me of twitter. The company has been stagnant and losing money forever, yet held on from 2013-2022 until being acquired at the upper-end of its price range despite endless losses.
Bitcoin kinda paved the way for stock tickers to act like tokens. After all, Bitcoin's primary use is as a speculative vehicle and as a "store of value". Why not use a stock ticker instead?
In this case, I'd say DJT makes a bad shitcoin because they lose real money and risk being delisted.
But there's an argument that Gamestop (GME) is actually a decent investment as a token. Forget the stores in the mall. They are a lost cause. The main product is the stock itself. When the price of GME goes up, GME issues stock and makes real money. They have like $5 billion of net cash in the bank now. Before the happening, they had a market cap of only $0.25 billion. Long term holders in the company have been rewarded massively.
A tradeable U.S. ticker is an incredibly valuable asset.
As of Gamestop's latest 10Q they reported assets of around $5.5B against 386M outstanding shares. Valuing Gamestop strictly as a pot of money implies a per-share price of around $14/share vs its current closing price of $21/share. Having a tradeable stock ticker is valuable but I am not sure it is worth $3B!
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