Trump Media & Technology Group Stock Plummets as Truth Social Expands into Streaming
A Steep Decline
Investors in Trump Media & Technology Group’s (TMTG) stock are facing disappointment as shares plummet. On Tuesday, TMTG’s stock, majorly owned by former President Donald Trump, tumbled by 14% following an 18% decrease the previous day. This decline comes in the wake of the company’s premier product, Truth Social, announcing its expansion into the streaming industry, a notoriously challenging and costly business.
TMTG’s stock is currently down over 70% from its all-time high, which it achieved shortly following merging with a blank-check acquisition company to go public. Although the company still holds a significant valuation, it is struggling to generate profits and is in dire need of cash. Experts have cautioned investors to be cautious when trading the stock due to its inflated valuation lacking solid fundamentals.
Struggling to Make Waves in Streaming
Truth Social’s foray into the streaming sector failed to excite investors. The platform spent the past six months testing web, iPhone, and iPad apps for live TV streaming. It aims to develop a content delivery network to support streaming apps for phones, tablets, and eventually smart TVs.
The streaming expansion of Truth Social might potentially host live news, religious programming, and family-friendly shows, movies, and documentaries that have faced cancellations or suppression on other platforms. tmtg CEO Devin Nunes, a former Republican congressman for California, emphasizes their goal to provide a permanent home for high-quality content that may face discrimination on other channels and content delivery services, ensuring creators have a guaranteed platform where they won’t be silenced.
While Truth Social’s ambitions align with Elon Musk’s platform X, which also emphasizes free speech, Truth Social faces an uphill battle. X boasts hundreds of millions of active users, while Truth Social’s audience remains significantly smaller. Moreover, X has struggled to attract advertisers due to hate speech and conspiracy theories running rampant on the platform since Musk reshaped the business.
The Trump Factor and Valuation
Trump’s association with Truth Social has been instrumental in its sky-high valuation, solidifying it as a meme stock. This means that the company’s trading is primarily driven by emotional responses rather than its underlying fundamentals.
Following TMTG’s merger with a blank-check company in late March, Trump’s net worth initially surged, adding billions of dollars to his wealth. However, the value of his shares has since plummeted from its peak of $5.2 billion to approximately $1.8 billion. On Tuesday alone, Trump’s net worth diminished by around $300 million due to the stock’s sudden decline.
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