Forbes editor predicts Trump stock prices could fall another 90%

Summary

Truth Social, the social media company associated with Donald Trump, experiences a significant drop in share value, plunging over 18%. The company plans to issue an additional 21.5 million shares to raise funds, a move that could lead to further dilution and loss for existing investors. Trump himself has lost nearly $3 billion in less than three weeks since the company went public. Forbes' senior editor, Dan Alexander, warns small investors who support Trump that they may face substantial losses due to the stock's structure, which favored Wall Street insiders and Trump at discounted rates. The company's valuation is considered overestimated based on its user base and revenue, with a potential for the stock to decrease by another 90%. Bankruptcy is not ruled out, posing a significant risk for those who have invested their savings.

Takeaways

• 📉 Truth Social's stock price plummets more than 18% due to the company's decision to issue an additional 21.5 million shares.
• 💰 The social media company is experiencing financial difficulties, hoping to raise funds through the sale of new shares.
• 🔄 Issuing new shares leads to the dilution of existing shares, causing their value to decrease and negatively impacting the share price.
• 📉 Since going public, Truth Social's share price has already halved, resulting in significant losses for investors, including Donald Trump who has lost almost $3 billion on paper.
• 🤝 Dan Alexander, the senior editor at Forbes, explains that the stock was structured in a way that benefited Wall Street insiders and Trump at the expense of retail investors.
• 💸 Retail investors, many of whom are small-time supporters of Donald Trump, have invested large sums of money, potentially facing substantial losses.
• 🏦 The company's fundamentals indicate a much lower valuation, with the public markets currently valuing it at $3.5 billion.
• 📉 Dan Alexander suggests that the stock could potentially fall by another 90% before aligning with the company's metrics.
• 🚨 The company's own filings indicate concerns about its ability to continue as a going concern, with bankruptcy not ruled out as a possibility.
• 🤔 Investors who have put their faith and money in Trump and his company may face significant financial loss, especially those who have invested their life savings.
• 📈 A comparison with other social media companies like Twitter or Facebook highlights the discrepancy in valuation and the potential for Truth Social's stock to continue its downward trend.

Q & A

What happened to Truth Social's stock price recently?

Truth Social's stock price tanked, plunging more than 18% due to the news that the company is putting an additional 21.5 million shares up for sale.

Why is the social media company offering more shares for sale?

The company is experiencing financial difficulties and aims to raise funds by issuing more shares.

What is the impact of issuing new shares on existing shareholders?

Issuing new shares leads to the dilution of already existing shares, causing them to lose value.

How much has Donald Trump lost since the company went public?

Donald Trump has lost almost 3 billion dollars on paper since the company went public less than three weeks ago.

What does the stock's performance say about small investors who believe in Trump?

Small investors who bought into Trump's company because of their belief in him are likely to be deluded and may end up losing money.

How were Wall Street insiders and Trump involved in the company's stock deal?

The stock deal was set up in a way that allowed Wall Street insiders and Trump to get in at very discounted rates.

What does the retail shareholder's experience reflect about the stock's performance?

Retail shareholders who invested large sums have seen significant losses, as those who bought shares when it peaked at $66 per share have now lost half their money.

What does the fundamentals analysis of the company suggest about its valuation?

The company's fundamentals, including user numbers and revenue generation, suggest a valuation in the hundreds of millions of dollars at most, implying that the stock could fall by at least another 90%.

What is the company's current market valuation?

The public markets currently value the company at three and a half billion dollars.

What potential future issues do the company's own filings indicate?

The company's own filings indicate that its accountants have concerns about whether it could continue as a going concern, suggesting that bankruptcy is a possibility.

How does the company's situation compare to other social media companies like Twitter or Facebook?

When comparing the company's fundamentals to those of other social media companies like Twitter or Facebook, it appears that the stock should continue to decrease drastically due to the significant gap in user base and revenue.