Trump incurred a substantial loss of around four billion dollars in the downfall of Truth Social.
Trump's Media & Tech Group (DJT) shares dipped last week to their lowest level since merging, making it public this spring.
The company has lost around 74% of its worth since it peaked at $66.22 on March 27.
This steep decline has resulted in substantial financial losses for investors, including Trump himself.
At its peak on May 9, Trump's roughly 114.75 million shares were worth an impressive $6.2 billion. Currently, their value has dropped to approximately $2 billion.
This significant decrease has resulted in Trump's removal from the Bloomberg Billionaires Index, which ranks the world's 500 wealthiest individuals.
Experts have repeatedly voiced concerns about Trump Media's astronomical price tag, given the company's financial struggles. Trump Media is currently operating at a loss, generating minimal revenue, and Truth Social, its main social media platform, remains a small player in the world of social media.
As Matthew Tuttle, CEO of Tuttle Capital Management, told CNN, if Trump Media didn't have a connection to Trump, its shares would likely be trading at just $1.
In April, billionaire Barry Diller expressed this sentiment on CNBC, labeling investors in Trump Media as "dopes." In June, LinkedIn co-founder Reid Hoffman echoed this on CNN, describing Trump Media's valuation as "absurdly out of the realm of normal." Both Diller and Hoffman are prominent Democratic donors.
Beyond Trump Media's financial woes, analysts believe there may be other factors contributing to its declining share price.
Tuttle suggests that the recent tight race between Trump and Vice President Kamala Harris in some polls could be a significant factor.
Indeed, since President Joe Biden endorsed Harris on July 21, Trump Media has lost around half of its market value.
“This stock is entirely a Trump-gets-elected play,” Tuttle noted. “If Trump wins, this could be a viable company. But if he loses, I’m not sure how this is a going concern.”
Trump Media declined to comment on CNN's request for a statement.
Despite these challenges, Trump Media still boasts over $300 million in cash reserves, which it could use for acquisitions and operational expenses.
Trump Media reported only $837,000 in revenue for the last quarter, but it is also in the process of establishing a streaming service targeted at conservatives. In August, Trump Media launched Truth+, a TV streaming platform on iOS, Android, and various versions of Truth Social.
However, a looming issue facing Trump Media is the impending expiration of its lock-up period.
This restriction, which prevents Trump and other insiders from selling their shares, is set to expire on September 20, according to filings. Once lifted, insiders will be free to sell their shares if they so choose.
Experts have hinted that it would be extremely challenging for Trump, as the majority shareholder, to sell his shares without negatively impacting the company's stock price.
The fate of Trump Media's stock market performance may change, especially following Trump's high-profile debate with Harris on Tuesday.
Nonetheless, Tuttle advises investors to approach this stock with caution and focus on its fundamental aspects.
“I am a strong believer in keeping politics and business separate,” Tuttle said. “If you’re holding onto this for dear life because you're a Trump fan, that's just foolishness. You invest to earn money.”
The business strategy of Trump Media & Tech Group (DJT) seems to be heavily reliant on Trump's potential election victory, as suggested by Tuttle. This dependency might explain why the stock dipped after Biden endorsed Harris.
The financial struggles of Trump Media, coupled with the concerns raised by experts like Tuttle, Diller, and Hoffman, have led to significant drops in the company's share price, causing substantial financial losses for investors.
