Topline
The newly public company tied to former President Donald Trump’s Truth Social platform isn’t the only social media stock rallying, as shares of the handful of other public social media companies are also on a hot streak.
Donald Trump's social media company began trading on the Nasdaq on Tuesday.
Key Facts
Trump Media became one of the few social media-first companies on the public market, joining Snap, parent of photo messaging service Snapchat, art and design-focused platform Pinterest, the community-based service Reddit and Meta, the trillion-dollar titan behind Facebook and Instagram.
Other than for industry kingpin Meta, whose shares dipped slightly Tuesday and are flat over the last week, it’s been a sizzling stretch for social media stocks.
Trump Media, which traded for the first time Tuesday under its DJT ticker nodding to its namesake’s initials, shot up 16% in its inaugural day on the Nasdaq stock exchange, swelling its market capitalization to roughly $6.6 billion to $7.9 billion.
Reddit shares jumped 9% on Tuesday, sending the company’s valuation to $10.4 billion, a cool 60% above its $6.5 billion valuation upon its initial public offering last Thursday.
Shares of Snap and Pinterest rose Tuesday and are each up more than 3% over the last week, outperforming the tech-heavy Nasdaq Composite stock index.
Contra
The coals may be hot for Trump Media and Reddit investors now, but prior social media offerings offer a cautionary tale. Snap’s stock trades about 60% below its peak on its first day of trading in 2017, and Pinterest’s stock trades 39% below its 2019 first-day high, still well below the S&P 500’s 95% return during the period. It’s a similarly underwhelming story for X, the entity formerly known as Twitter, as it traded at roughly 10% below its 2013 first-day peak in early 2022, just before the U.S.’ richest man Elon Musk took the company private. Meta is the lone exception, as its shares have gained a whopping 1,200% since its 2012 stock market debut.
Tangent
Trump Media may have outgained its newfound peers in its first day as a public company, but it has a significant amount of ground to gain in terms of revenue. The Truth Social parent reported $3.4 million in total revenue for the first nine months of 2023, far lower than Reddit’s $555 million, Pinterest’s $2.1 billion and Snap’s $3.2 billion. Reddit, Pinterest and Snap all report hundreds of millions of monthly active users, far more than Truth Social’s reported monthly user base of five million.
Key Background
Aside from Meta, most social media firms have failed to translate their massive reach into major profits, as each of Reddit, Pinterest and Snap tallied negative net income during 2023 (Trump Media lost $49 million over 2023’s first three quarters). Trump Media’s roughly $9 billion market cap puts it in line with Reddit (valued at $10 billion) and just shy of Pinterest ($24 billion) and Snap ($19 billion). Trump, who owns between 58% and 69% of Trump Media, enjoyed a tripling to his net worth as Trump Media’s share price surged, growing to about $7.5 billion, according to Forbes’ estimates.
Further Reading
