The DJT stock has the characteristics of a meme stock, with sentiment and not fundamentals determining the price.
Trump Media & Technology Group, which began trading on Tuesday, March 26, closed down on Thursday as analysts began explaining the data-driven details of the stock. The DJT stock began trading at $70.90, and peaked at $ 79.38. By March 27, the stock was trending downward. It closed on March 28 at $61.96.
Analyst predictions
Equity analysts have been nearly universal in their derision of the DJT stock. At best, they point to its potential as a meme stock being driven by sentiment, and as the sentiment goes, so does the stock. The platform had revenue of $3.4 million in the first nine months of 2023; losses totaled $49 million. The company made its way into the stock exchanges by means of a SPAC, or the purchase of a shell company in order to bypass regulatory due diligence.
DJT was valued at $8 billion on March 26 based on the stock price. The stock shed $600 million in value on March 28, and continues falling. The official close at $61.96 has been followed by further decline, and at the time of writing is at $60.40.
The mother of all meme stocks
The comparison to meme stocks such as GameStop and Reddit stems from a set of factors, none of which touch upon the fundamentals of the business.
A comparison of DJT with other equities labeled as meme stocks at their height on February 27, 2021, paints a picture of just where the equity is going:
BBBY (Bed, Bath & Beyond) closed at a valuation of $6.4 billion; it’s bankrupt now.
BB (BlackBerry) was worth $14.1 billion; current worth $1.6 billion.
Some more recent meme stock points for comparison:
GME (GameStop) was worth $22.6 billion. Q4 2023 revenue failed to meet analysts’ predictions, and the company is shedding workers to try and prune operating costs.
RDDT (Reddit) Started with a market cap of $6.4 billion on March 20; the stock peaked at 74.90 on March 27, and closed at 49.32 on March 28.
Axios points out that that “DJT’s market value is more than 2,000 times its estimated annual revenue, compared to Reddit at 10 times, Meta at 7 and Snap at 6.”
Meme stocks are nothing if not volatile. The stock can easily recover, and plunge again several times before hitting a death spiral that a 2000x valuation hints is in the offing.
Argomenti
