Shares of Trump Media & Technology (DJT 7.92%) were soaring for the second straight day on Wednesday as investor fervor over the newly public social media stock continued.
The stock closed up 14.2%.
Image source: Getty Images.
Truth Social gains again
There wasn't any specific news out on Trump Media, which went public on Tuesday through a special purpose acquisitions company (SPAC) merger with Digital World Acquisition Company (Nasdaq: DWAC). However, it's not unusual for a newly public stock to be volatile in its first trading days as it finds an equilibrium point and traders also try to capitalize on the volatility.
Trump Media has some of the characteristics of a meme stock as it seems more likely to swing on the whims of traders or news related to Trump himself than it is on its actual fundamentals.
In the first three quarters of 2023, the company, which owns the Truth Social platform and aims to launch a streaming service, brought in just $3.4 million in revenue as its advertising business is still in its infancy. It also lost $49 million on a generally accepted accounting principles (GAAP) basis.
What's next for Trump Media
The company plans to launch a "non-woke" streaming service called TMTG+, but investors should hope to see its fundamentals improve quickly as it's hard to justify its current market cap of more than $7 billion with barely any revenue to show.
By comparison, Reddit was valued at less than that in its initial public offering (IPO) last week even though it made $804 million in revenue last year.
Given the nature of the business and that former president Trump is in the news frequently these days, it wouldn't be surprising to see the volatility in the stock continue.
