Donald Trump Stock Predicted to Collapse After Truth Social Goes Public

Donald Trump's stock could collapse when his social media platform Truth Social goes public, experts have suggested.

Shareholders of Digital World Acquisition Corp. (DWAC), an existing shell company, agreed to merge with Trump Media and Technology Group (TMTG) on Friday, clearing the way for the former president's company to go public.

Wall Street values Trump Media at around $9 billion. However, experts suggest the price will soon plummet.

"This is a very unusual situation. The stock is pretty much divorced from fundamentals," Jay Ritter, a finance professor at the University of Florida's Warrington College of Business, told CNN.

"The underlying business doesn't seem to be worth much. There is no evidence this is going to become a large, highly profitable company," he said. "I'm reasonably confident the stock price will eventually drop to $2 a share and could even go below that if the company blows through the money it got from the merger."

"At these levels, it appears untethered to its underlying business results," Matthew Kennedy, senior IPO strategist at Renaissance Capital, told CNN. "Eventually, valuations tend to fall back on fundamentals. That means this stock is definitely at risk of plummeting back down to earth."

Newsweek reached out to a representative for Trump via email for comment.

Trading under the ticker "DJT", shares of the company opened high on Tuesday, its first day of trading after it completed its merger.

As of 9:40 a.m. ET, "DJT" was trading nearly 41 percent higher at about $70 a share, according to Google Finance data.

"Today marks a pivotal moment not only for DWAC and TMTG as a combined entity, but for the broader media and technology landscape," Eric Swider, former CEO of Digital World and a new director of TMTG, said in a statement on Tuesday.

Speaking to Newsweek, Heath Brown, an associate professor of public policy at City University of New York, said: "I suspect the price of that stock will be as volatile as the candidate."

Meanwhile, William Hall, a political science and business professor at Webster University, told Newsweek it was "unlikely" the stock would continue to do well.

"It is not at all surprising that this stock is initially, doing quite well, however, its ability to continue doing well is, highly questionable and in my view, very unlikely," he said. "Keep in mind that in business and securities, ultimately, it is the both the substance and the quality and the stability of the core foundation upon which the entity is built, that will determine its ultimate success or failure. In this particular case, all three of these essential core variables are highly questionable as well as suspect. One must always bear in mind, the apple never does fall from the tree."

Update, 3/26/24, 10:37 a.m. EST: This story has been updated with further information and comments from Brown and Hall.