A senior editor at Forbes predicts that the stock of Donald Trumps social media company could go to zero, and retail investors who bought it to support the former president could lose big.
If you look at the fundamentals of the company, its poised to go down a lot more, Dan Alexander told CNN s Erin Burnett on Monday. If you look at the number of users this company has, the amount of revenue that it generates, you know, its valuation should be measured in the hundreds of millions of dollars, at the most. Right now, the public markets are valuing it at 3.5 billion.
So that means this stock should fall by at least another 90% before the metrics start to make any amount of sense, he continued.
And for people who are just blindly putting their faith in Trump and in the company, that means that they could stand to lose a lot of money.
Shares of Trump Media & Technology Group, Truth Social s parent company, plummeted by 18% on Monday after the company disclosed in a regulatory filing that it plans to offer more than 20 million additional shares. Mondays drop adds to a string of losses since Truth Socials market debut on March 26.
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In an SEC filing last month, Trumps company revealed that it had lost more than $58 million and generated only $4.1 million in revenue last year. An auditor warned in the filing that the figures cause substantial doubt about whether the business can continue.
Analysts have said the share price is overinflated, boosted by small-time investors, given the social media platforms size and revenue.
The Washington Post spoke to some investors following Mondays drop, reporting that many Trump supporters see the investment as a statement of faith in the presumptive GOP presidential nominee.
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I know good and well its in Trumps hands, and hes got plans, one investor told the Post. I have no doubt its going to explode sometime.
According to Alexander, If somebodys putting a significant chunk of their life savings into it, they could really get wiped out by the very person who theyre trusting their money to.
He added, I mean, if you look at the companys own filings, you know, theyre saying that its accountants had questions about whether it could continue as a going concern. Theyre saying that bankruptcy is not out of the question eventually, so this thing could go to zero eventually.
See the segment below.
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