April 20, 2024 - 5:12pm

In the two weeks since going public, Trump Media and Technology Group has been declared a meme stock, buoyed not by fundamentals but by the cachet of Donald Trump’s name and the political posturing carried out by its platform Truth Social. With only five million users, a net loss of $58 million last year, and a business model that looks no more promising than X’s, it seems hard to justify a multi-billion-dollar market cap when X’s 200 million users only give it a $24-billion cap.

Truth Social has a deadline, which is September. That is when the six-month lockup period for Trump’s own shares expire, and he can turn his shares (he owns over half the company) into cash for whatever purposes he sees fit. In light of the trouble he had raising a $175-million bond to appeal his New York fraud conviction, as well as all the other uncertainties around his businesses, Trump doubtless needs more funds. There is little about Truth Social to suggest it is a serious endeavour, and Tuesday’s announcement that it will move into streaming only dampened enthusiasm further, sending the stock to an all-time low before modestly recovering to $26, far off its post-IPO peak of $66 on 27 March.

In that light, trying to move into an already-crowded and dicey streaming market, competing against other “anti-cancellation” platforms such as the Tucker Carlson Network, seems more rhetorical than strategic. The company trumpets how many “retail investors” it has — in the hundreds of thousands — and it’s unimaginable that these investors aren’t by the man and the cause behind the stock, rather than its non-existent fundamentals.

While the company board could give Trump a special dispensation to sell his shares before the end of the lock-up period, doing so could trigger lawsuits and create even more distractions in the run-up to the election. Rather, the streaming announcement suggests that Trump and CEO Devin Nunes are looking to keep their investors’ faith going until the lock-up ends, counting on retail investors and diehard supporters such as car loan baron Don Hankey (who put up Trump’s bond) to compensate for the volatility shocks.

It is all a bit reminiscent of a large-scale version of Glenn Beck’s Goldline International promotion 15 years ago, where he used his clout to encourage purchase of gold coins for the coming financial apocalypse. Goldline had to cut Beck loose from being a “paid spokesman” after Fox News objected, and the firm collapsed a few years later in a mess of fraud charges and injunctions. Instead of wildly overpriced gold coins, Trump is hawking Maga values, but the upshot is more or less the same, save that Beck wasn’t a majority shareholder of Goldline.

It is also, ironically, reminiscent of Sam Bankman-Fried’s FTX and Alameda Research. There is no way an offshore crypto exchange and hedge fund could have attracted anywhere near the reputation and prestige it did had Bankman-Fried and his associates not presented themselves with blue-chip pedigrees (Stanford and MIT) and a meme-worthy ideology of “effective altruism” to bolster the pumping coins with feel-good values.

If Trump Media and Technology Group is a meme stock (and from the ticker symbol DJT, that’s a safe bet), FTX was a meme exchange. The sheer size and chaos of social media and networked life today makes it inevitable that even “intelligent” people can buy into an offshore crypto exchange and put its founder on the cover of Time without doing anything in the way of due diligence. So while there’s depressing fun to be had from watching Truth Social come to nothing beyond a money-losing hugbox and indirect fundraising scheme, people in meme houses shouldn’t throw meme stones.

David Auerbach is an American author and former Microsoft and Google software engineer.