Remember in Godfather II when the mobster Hyman Roth tells Michael Corleone, his co-investor in President Fulgencio Batista’s Cuba, “Michael, we’re bigger than U.S. Steel”? U.S. Steel is no longer the colossus it was in 1958, when that scene takes place. But it still caught my attention when The Wall Street Journal reported Tuesday that the valuation of Donald Trump’s Truth Social was almost as big as U.S. Steel’s. This was the very first day of trading for the app’s parent company, Trump Media & Technology Group (ticker symbol: DJT), when the stock price rose 56 percent to $78 per share; it closed Wednesday just south of $70. That’s a remarkably strong performance for a money-losing social media platform.
You may recall from Godfather II that the Mafia’s stake in Cuba is abruptly reduced on New Year’s Eve by Fidel Castro to zero. DJT is similarly unstable. Jay Ritter, a finance professor at the University of Florida, told CNN that if the company’s stock reflected its actual value it would be priced not at $70 but at $2. The large mismatch between stock price and stock value will sorely tempt the cash-poor Trump to sell off a significant portion of his shares, in a potential maneuver that I believe I am the first to label “Trump and dump.”
How worthless an investment is Truth Social? Looking at what killjoys call “the fundamentals,” the platform’s monthly active users fell 51 percent in February compared to the previous year, down to a very modest 494,000. Facebook, Twitter, and even Threads all have monthly active users in excess of 100 million. If Trump’s poll numbers followed the same trend as Truth Social traffic, Nikki Haley would today be the Republicans’ presumptive nominee.
DJT is what brokers call a “meme stock” and what the rest of us call a “sucker bet.” Meme stocks, of which GameStop is, in the words of The Street’s Martin Baccardax, “patient zero,” resemble internet memes in their volatility. When’s the last time you watched “Charlie bit me”? Probably not long before GameStop was last judged a plausible investment. To give you some sense of the culture behind the meme-stock phenomenon, meme-stock investors refer to themselves as “apes.” Apes can make money with meme stocks because, with the right mixture of tactical skill and dumb luck, you can make money with anything. But most apes end up like that poor bastard who gets his skull bashed in at the start of 2001: A Space Odyssey. The Securities and Exchange Commission would really prefer that you don’t invest in meme stocks.
It’s curious that Trump’s MAGA cult wants to invest in Truth Social but not to join Truth Social. After all, buying Truth Social will set you back 70 bucks a share. Joining Truth Social is free! MAGA Republicans number about 40 million, according to a January survey, and about one-third of these very unhinged extremists believe this country is on the brink of a violent civil war. Yet fewer than 2 percent will bestir themselves once a month to tap their computer keyboard to read the latest dispatch from MAGA Central. That gives me some hope that this same crowd will forget to go to the polls on November 5.
If there’s a political science term to describe a movement in which people are more willing to invest than participate, it certainly isn’t populism. Populist implies working-class, and the day traders who buy and sell meme stocks are seldom proletarians. This is a country where nearly half of all households own no stocks at all, where those that do typically possess them via retirement accounts managed by somebody else, and where the median value of stocks that are traded directly is a mere $15,000. No, the people buying Truth Social stock are either Apolitical Risk-Takers (APTs), hoping to ride the wave, or haut bourgeois True Believers (T.B.s). The T.B.s, I would guess, tend to be college-grad retirees, because about half of all MAGA types are retirees and not quite one-third hold college degrees.
Trump himself is part APT and part T.B. The big question for the Trump Media & Technology Group is which half of his brain will prevail. On the one hand, Trump wants to be president again, and Truth Social has the potential to become his Pravda, a very handy propaganda outlet under his complete control. On the other hand, Trump has this liquidity problem. Hence the temptation to Trump and dump.
As I’ve observed previously, Trump would rather swallow a fistful of crushed glass than use his own cash to put up, either directly or as collateral, the $175 million bond that’s due April 4 in his New York civil fraud case. My guess is that right now Trump’s leaning heavily on the insurance giant Chubb, which already bonded him for $91 million in the E. Jean Carroll judgment, to accept real estate as collateral for a $175 million bond. (Surety companies hate to accept real estate as collateral.) God only knows why Chubb would give Trump the time of day—its potential reasons are not flattering—but Chubb tried hard to put together an earlier deal to post the $454 million bond that an appeals court later reduced to $175 million.
Even if Trump avoids using liquid assets to post the $175 million bond, though, he will soon need more cash for other reasons. As I observed last week, he is facing an avalanche of adverse legal judgments and, barring a miraculous change in Trump’s behavior, the strong likelihood of many more in the future—so many that, one way or another, Trump is, I believe, looking down the road at personal bankruptcy. (An SEC filing disclaimer says much the same, minus my hurtful prediction that Trump personally will go bust.)
Plus there’s all that goddamned money. The start of trading for the newly formed Trump Media & Technology Group more than doubled Trump’s net worth, from less than $3 billion to well over $6 billion. For the first time ever, Trump is listed on Bloomberg’s Billionaire Index, an exclusive club consisting of the 500 wealthiest people on Planet Earth. If you think Trump is too important to care about being one of the 500 wealthiest people, you haven’t been paying attention. But if Trump lets his $4 billion Truth Social stake ride, he won’t long remain on Bloomberg’s Billionaire Index, because Truth Social’s market valuation won’t long remain anything like the $8 billion Wall Street says it’s worth today.
Trump’s $4 billion stake in Truth Social constitutes more than half of all shares. He is barred for six months from selling any of that stake, unless he receives permission from the company’s board. Rather naïvely, I assumed this would be difficult, because so big a sell-off might look to regulators an awful lot like an illegal “pump and dump” scheme wherein some boiler-room sleazeball talks up the value of a stock to investors and then dumps his shares, making a killing while his clients lose their shirts. The Truth Social board would also likely worry that letting Trump smash the piggy bank would endanger the value of their own investment in the company and invite a lot of outraged shareholder lawsuits.
I figured all this, however, without considering the composition of Truth Social’s board, which turns out to consist of seven members, three of them former Trump administration officials (former U.S. Trade Representative Robert Lighthizer, former White House aide Kash Patel, and former Small Business Administration chief Linda McMahon). Former Representative Devin Nunes, whose reward for running interference during Trump’s first impeachment was to be named chief executive of Truth Social, makes four board members unlikely to contradict Trump, and a fifth is Don Jr., who wouldn’t know how. If Trump asked this board to jump off Trump Tower, it would race to the elevator and push “up.”
According to The Wall Street Journal’s Amrith Ramkumar, should Trump receive a waiver from his board, company rules will permit him to sell “several hundred million dollars worth of stock” over a three-month period. That will surely be sufficient to provoke a sell-off by the APTs (who by definition are in it only for the money) and to wipe out, in turn, the T.B.s, who bought shares because they believe in the once and future President Donald Trump. Maybe the T.B.s wouldn’t mind; maybe it’s even what they expect. Nine years after Trump burst onto the political scene, the most baffling truth about Trump is still best encapsulated by that great New Yorker cartoon from 2016 in which two lambs look up at a billboard showing the Big Bad Wolf, in suit and tie, saying, “I Am Going to Eat You.” In response, one lamb turns approvingly to the other and says, “He tells it like it is.”
