Trump is almost 2 billion in debt and the amount is growing

(CNN) — Former President Donald Trump’s social media stock is plunging just ahead of the election, cutting deeply into his net worth.

After an absurd spike over the past five weeks that was based entirely on Trump’s perceived reelection prospects — and had nothing to do with the company’s actual business — Trump’s social media stock has tanked. It has now lost about 41% of its value in just three days.

Truth Social owner Trump Media & Technology Group’s share price plunged another 14% on Friday after tumbling 12% Thursday and 22% Wednesday — Trump Media’s worst one-day loss since going public in March.

After the closing bell on Tuesday, shares were priced at $51, valuing Trump’s dominant stake in the company at about $5.9 billion. On Friday, the value of Trump’s shares tumbled to $3.5 billion. That means Trump lost $2.4 billion in net worth since Tuesday.

Trump Media’s shares, which trade under the ticker “DJT,” have become a proxy for how traders think the presidential election will turn out. Prediction markets in recent days have moved toward projecting that Vice President Kamala Harris will win the election, even as polls clearly show a toss-up election with no clear favorite.

“Meme stocks, of which DJT is one, are very susceptible to momentum shifts,” said Steve Sosnick, chief strategist at Interactive Brokers, who noted a clear “vibe shift” in recent days’ prediction markets. “Last week’s spike in prediction markets was a boon to DJT; conversely a shift away would hurt the stock.”

The company’s fundamentals have nothing to do with why the stock is traded. Trump Media did not release any major news that would explain the nosedive.

“Remember, that stock is basically a binary, leveraged election wager,” Sosnick said. “If he wins, then there’s a case to be made for increasing its value. If he loses, it reverts to being a barely profitable company with scant revenues.”

Trump Media’s stock has been extraordinarily volatile all year. But between September 23 and Tuesday’s closing bell, Trump Media had quadrupled in value.

The enormous gains boosted Trump Media’s value to $10.3 billion as of Tuesday’s close. That means it was briefly worth more than the implied value of X, the Elon Musk-owned social network formerly known as Twitter.

That’s despite the fact that X has about 70 million monthly active US users on iOS and Android, according to Similarweb data shared with CNN. That’s roughly 100 times Truth Social’s 698,000 monthly active US users.

Even Threads, Meta’s relatively new X competitor, has about 20 times the user base of Truth Social, according to Similarweb.

Trump Media’s fundamentals remain very modest for a company that is still valued at about $6 billion. For context, CBS owner Paramount Global, a company that Trump Media recently surpassed in market value, has brought in more than $14 billion in revenue so far this year.

But Trump Media has generated just $1.6 million of revenue this year.

George Kailas, CEO of Prospero.ai, a research platform that helps traders gather market intelligence, told CNN on Friday he’s not surprised by the sudden momentum shift for Trump Media because that’s what happens with meme stocks.

“It’s like a game of musical chairs. Everyone is happy when the music is playing and the stock is going up,” Kailas said. “But since it isn’t based on any kind of good tangible value, the second that stops, everyone panics…and the bottom falls out.”

The-CNN-Wire
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