What You Need to Know About the Trump Stock Hype ‘Unimaginable’: Here’s How Baltimore Residents Experience the Bridge Collapse

In late 2021, shares of GameStop, a computer game retailer, soared. It could not be explained rationally. This company’s operations are doomed. Just as streaming heralded the end of Blockbuster, a DVD rental company, GameStop’s business is also moving online.

Hedge funds therefore began shorting the stock, meaning they were betting that its value would fall. The rise in GameStock stock had very different reasons: Many small day traders were angry that a company they loved was being driven into ruin. They talked in group chats on the Reddit platform and decided to teach the hated managers of the powerful hedge funds a lesson.

Against all reason, they started buying up the securities, driving up the price. With success: at least one hedge fund has actually suffered billions in losses.

However, the GameStop rebels’ triumph was short-lived. In the long run, the economic logic could not be stopped. GameStop is a company in decline and its shares are at a sustained low today. The only consolation: the company managed to come up with a new name for a type of stock: meme stock. We now call these effects that only have a symbolic value.

There’s a lot to suggest that Trump Media & Technology Group stock is another meme stock. They have been trading under the symbol DJT on the Nasdaq technology exchange since the beginning of this week and have skyrocketed during the IPO. The price rose from about $50 to about $80 within hours before settling at $58. Donald Trump owns 58 percent of these shares. On paper, they are currently worth $4.6 billion.

But for now only on paper. As usual with meme stocks, this is a token value. The real company behind it, the Truth Social platform, is a financial flop. In the first nine months of last year, the company generated just $3.4 million in revenue while posting a loss of $49 million.

Truth Social is a flop

Only ten million people have downloaded the Truth Social app since its launch. By comparison, competitor Threads, a sister company to Facebook, had 171 million downloads between its launch in July and November last year.

Trump has 6.5 million followers on Truth Social and once 87 million on Twitter. He would probably get a similar number Plus, the ex-president is pretty much the only one who has followers on his platform.

One reason DJT stock is soaring is day traders, as was the case with GameStop. They speculate on short-term profits, or they are loyal Trump fans who literally want to support their idol at any cost. In addition, the US Federal Reserve has announced a cut in key interest rates. Cheap money and generous Corona subsidies from the government also fueled the price of GameStop shares at the time.

But experienced professionals also participate. This starts with the IPO. Trump’s media company is the offspring of a SPAC. The abbreviation stands for Special Purpose Acquisition Company. There’s a trick behind it that shows you how to take your company public without a complex and expensive IPO. You buy an empty jacket and fill it with new contents.

Shady deal with billionaire

SPACs were in high demand until the Fed started raising rates. The hype has since died down. With the help of a billionaire named Jeff Yass, Trump apparently managed to revive it.

Yass owns a trading firm specializing in options and was a major investor in Digital World Acquisition Corporation, the company into which the Trump media was merged. Maybe one hand washes the other in this dark business. Yass is also a major investor in ByteDance, TikTok’s Chinese parent company. During his time in office, Trump has advocated transferring this platform to American owners or banning it. Now he wants nothing to do with it anymore and advises the politicians of the Grand Old Party to stay away from TikTok.

As mentioned, the billions that DJT’s IPO has brought into Trump’s coffers are still Monopoly money for the time being. It remains to be seen whether the ex-president can convert them into a real currency. He should be able to lift a six-month blocking period, because the board of directors consists of members who are loyal to him. However, it remains to be seen how the stock price will develop if Trump starts selling on a large scale.

But the ex-president needs money, and urgently. His bail for a fine in the civil case for manipulating the accounts has been reduced from $464 million to $175 million, but that’s still a lot of money, especially since it has to be posted in cash. At the same time, Trump must pay astronomical legal fees, currently around $200,000 per day.

That’s why Trump will do anything, absolutely anything, to get money. He has ensured that the party also helps him pay his legal costs. He has his name plastered on steaks and vodka to earn royalties.

Recently there is even a Trump Bible (no joke). Together with country singer Lee Greenwood, Trump wants to bring a special version of the Holy Scriptures to the people for the competitive price of $60. “Religion and Christianity are what this country misses the most,” he explains. “We need to get America to pray again.” (Let America pray again.)

In the days of the Wild West, businessmen like Donald Trump were called “snake oil salesmen,” meaning salesmen who knew how to sell people junk at exorbitant prices with false promises. Trump is not just another ‘snake oil salesman’, he is currently the most successful. The fact that many people still fall for his scams, okay, that’s their prerogative. If you still haven’t understood that you can only lose, you can’t be helped anymore.

What’s worrying, however, is that the rise in DJT stock is a fatal reminder of the time before the great stock market crash of 1929. Snake oil salesmen were also out for mischief back then. The most famous was Charles Ponzi, who used stamps to set up a gigantic pyramid scheme and defraud half the world. Or the ‘match king’ Ivan Kreuzer, who achieved the same with inconspicuous matches.

Meme stocks, NFTs, and yes, even cryptos are signs that economic reason is increasingly being replaced by irrational greed and speculative desires. Will this continue to work for a long time?