Trump's media company valued at nearly $10 billion as shares surge in debut

Shares of Trump Media & Technology Group surged more than 45% on Tuesday in their debut on the Nasdaq that comes more than two years since its merger with a blank-check firm was announced.

At $72.63, the company's market capitalisation was $9.84 billion on an undiluted basis. Trading in the shares under the ticker "DJT" was briefly halted for volatility just after the opening bell.

Trump's majority stake in TMTG was last valued at $5.72 billion, although lock-up restrictions for six months could prevent him from selling or borrowing against his shareholding.

TMTG, which owns social media platform Truth Social, officially merged with blank-check company Digital World Acquisition Corp on Monday.

Shares of Digital World, which is now TMTG, had surged more than 35% that day.

"The valuation of the business is rich relative to its underlying fundamentals, but I would not get in front of it in the near term," said Thomas Hayes, Chairman of Great Hill Capital.

"This valuation may be more of a proxy on the enthusiasm of supporters for Trump than a reasonable estimate of underlying business prospects."

TMTG was the second biggest percentage gainer across US exchanges at 9:55 a.m. ET, according to LSEG data. Retail trader-focused social media and trading platform Stocktwits listed it as the most trending stock.

Trump's financial woes

Trump, who is facing four criminal trials in his race to US presidency, has been struggling to raise money for his campaign and legal expenses.

Meanwhile, a pause to a ruling that would have blocked New York state authorities from seizing his assets bought Trump some financial breathing room as he tries to build a campaign war chest and keep his real-estate empire intact.

The deal will inject $300 million cash to Truth Social, which had lost $10.6 million from its operations in the first nine months of 2023.

The company also provides a way for supporters of Trump to bet on his resurgence as a political figure, as evidenced by shares of shell company Digital World Acquisition nearly tripling in value this year.

A Reddit user Chester-Ming posted "the (Trump) hype has the potential to offset everything - shitty fundamentals, insane dilution and more", on 15 million-large "wallstreetbets" investor forum, although the user warned, opens new tab that Trump could potentially cut his stake.

Digital World said in a filing last month that Trump may divest his stake in Truth Social and cease any involvement in its management based on how his bid for president goes.

The special purpose acquisition firm signed its merger agreement with Trump's company in October 2021 and since then has been the target of investigations by the U.S. Department of Justice.

It reached an $18 million settlement with the U.S. securities regulator over inaccurate disclosures in July last year.

Shareholders voted in favor of the deal last week, more than a month after the regulator gave the green light for the deal.