Trump Loses $4 Billion Because of Truth Social

The social media company owned by former President Donald Trump is in a deep recession, wiping out a large chunk of his net worth.

Shares of Trump Media and Technology Group last week fell to their lowest level since the merger with Truth Social this spring.

Trump Media has lost about three-quarters (74%) of its value since peaking at $66.22 on March 27, and the selloff has wiped out a significant chunk of the wealth of investors, including Trump.

Trump’s controlling stake of 114.75 million shares was valued at $6.2 billion on May 9 and is now down about $2 billion, a sharp drop that has knocked Trump off the Bloomberg Billionaires Index of the world’s 500 richest people.

The decline in Trump’s wealth reinforces concerns raised by experts who have repeatedly warned that the multibillion-dollar valuation of Trump’s media and technology conglomerate defies logic, as the company loses a lot of money, generates very little revenue, and Truth Social is a relatively small player in the social media market.

“If it wasn’t for Trump, the stock would be trading at $1,” Matthew Tuttle, CEO of Tuttle Investment Management, told CNN.

In April, billionaire Barry Diller told CNBC that people buying Trump shares were “idiots,” and in June, LinkedIn co-founder Reid Hoffman told CNN that Trump Media and Technology was valued “absurdly out of the norm.”

Both Diller and Hoffman are major Democratic donors.

Aside from the conglomerate’s weak fundamentals, analysts say there are other possible factors behind the company’s stock price decline.

Matthew Tuttle alleges that Vice President Kamala Harris’s lead over Trump in some polls is a major reason for the decline.

In fact, Trump Media has lost about half its market value since President Joe Biden dropped out and endorsed Harris on July 21.

“The stock is moving in the direction of the Trump election,” Tuttle said. “If Trump wins, this might be a viable company, but if he loses, I don’t know how the company can survive.”

Trump Media and Technology Group did not respond to CNN’s request for comment.

Trump Media still has more than $300 million in cash, a financial firepower it can use to make acquisitions and fund its operations.

While Trump Media generated just $837,000 in revenue last quarter, it is building a streaming business that caters to conservatives.

Trump Media launched Truth+, a streaming TV platform, in August.

Another cloud hanging over Trump Media is the impending expiration of a lockout period that has prevented Trump and other company insiders from selling shares, which is set to expire on September 20.

Still, experts say it would be extremely difficult for Trump, the company’s largest shareholder, to sell all or most of his shares without sending the stock crashing.

The value of the group’s shares could change with the former president’s high-profile debate with Harris on Tuesday.

Still, Matthew Tuttle cautioned individual investors, and even Trump fans, to be cautious about the stock and pay attention to fundamental analysis. “I’m a big believer in separating politics from profits,” he said. “If you’re holding on to this because you’re a Trump fan, that’s stupid. You’re investing to make money.”