Source: Zhitong Finance
Following yesterday's closing increase of more than 16% on the first day of listing,$Trump Media & Technology (DJT.US)$US stocks continued their gains ahead of the market on Wednesday. As of press time, the stock is up more than 16%. However, according to some analysts, the stock's valuation of close to 8 billion US dollars seems too high because the company has not yet made a profit, and its largest shareholder, former US President Trump, is likely to escape profits from this round of rise.
On Tuesday, Trump Media Technology Group surged 59% during its turbulent first-day deal, then regained gains and finally closed up 16.10%, according to data.
According to reports, Trump owns about 78.8 million DJT shares, which means that nearly 60% of his shares are worth about 5 billion US dollars. However, these are just book gains because Trump can't sell these shares during the six-month ban.
But over the past period, Trump faced a shortage of cash while battling criminal charges and civil charges, and the outcome of the lawsuit appears to be a key factor in deciding whether Trump will cash out from stocks. To a slight relief for investors, Trump won an appeal and if he disburses $175 million within 10 days, he will suspend payments of $454 million in connection with the civil fraud ruling.
Now, in order to turn his DJT holdings into cash, Trump needs approval from the board of directors and underwriters to be exempted from the ban. Board members include his son Donald Trump Jr., and former officials in his administration.
It's important to note that if such an exemption is granted, Trump is likely to sell most of his shares, which means DJT could face a sharp drop.
Trump may also seek to use his DJT shares as collateral to obtain loans, but the possibility of obtaining funds in this way is very low.
Investing Group leader Jonathan Weber warned that DJT's rise will be driven by speculation until the social media platform can show resilient user growth and improved financial conditions.
DJT also warned that it is expected to experience “significant” losses in the foreseeable future, adding that it may never generate enough revenue to be profitable.
editor/tolk