Trump Media doesn't add up

Hullo, it’s Alex in London. Trump Media got a boost from investors on its initial day of trading as a public company. But first...Three thin [View in browser]( [Bloomberg]( Hullo, it’s Alex in London. Trump Media got a boost from investors on its initial day of trading as a public company. But first... Three things you need to know today: • Dell cut 13,000 workers over the past year, [more than anticipated]( • iPhone shipments in China [fell 33% in February]( • The resignation of Stability AI’s CEO [is just the latest blow to the startup]( Measuring value Let’s assume, for a second, that [Trump Media & Technology Group Corp.](bbg://securities/DJT%20US%20Equity) is a normal company whose stock should be judged by the merits of any other normal stock. With that in mind, let’s examine some of the financial fundamentals. In case you need to get up to speed, TMTG (as I’ll call it) is the parent company of Truth Social, the social network founded in 2021 by Donald Trump. In October 2021, it agreed to merge into Digital World Acquisition Corp., a blank-check company. Blank-check companies — or SPACs, as they are also known — enjoyed a brief moment back in 2021 as a way for companies to go public without much scrutiny of their finances. They simply merged into publicly traded firms with no operations that were sitting on a big pile of cash that investors had more or less blindly trusted the board to invest wisely. And reader, it often didn’t end well. By the end of 2023, at least 21 companies that went public through SPAC mergers [have gone bankrupt](. In total, SPACs lost investors — often retail stock buyers — some $46 billion from the peak of their valuations. On Tuesday, TMTG became a public company after its merger was finally approved last week. And when the shares started trading in New York with the ticker DJT, they jumped 42% to $70.90. That valued the company at $9.6 billion. By the close of regular trading, the shares had come back down to $57.99, which added about $650 million to Trump’s net worth because of his ownership stake, according to the [Bloomberg Billionaires Index](bbg://screens/RICH). Which brings us to the fundamentals. Based on that opening share price, TMTG is likely valued at more than 2,000 times annual revenue — taking the reported $3.4 million in nine-month sales and estimating for the year. Now, tech companies are often afforded generous valuations based on the assumption of rapid growth and the promise of future riches – or at least they were before interest rates increased. But let’s put that multiple of sales in some context: [Nvidia Corp.](, the hit stock of the artificial intelligence revolution, is valued at just 38 times sales. When the preeminent social media platform of the past two decades, Facebook Inc. (now Meta Platforms Inc.) went public in 2012, it was valued at 12.5 times revenue. The only similar point of comparison that springs to mind is Facebook’s acquisition of WhatsApp, which at the time had little revenue to speak of, for $19 billion in 2014. WhatsApp did, of course, have a lot of users, though. About 450 million, at the time. TMTG doesn’t actually report the number of active users, though it said in a [January regulatory filing](bbg://screens/DOCV%20CF%200001193125-24-038590) that it has had “9.0 million signups for Truth Social via iOS, Android and the web.” Generously, each of those users is therefore afforded $1,067 in value. Meta is currently valued at $422 per monthly active Facebook user. It’s highly likely, however, that only a fraction of the signups to Truth Social use the app anything like monthly. And we haven’t even mentioned Trump Media’s reported $49 million loss in the nine months ending in September. All of which might explain why Trump Media is now the [most expensive US stock]( to bet against, as Bloomberg News reported. There’s not much stock available (the number of shares being traded is pretty low), and lots of people think it’s overvalued. In other words, it’s a meme stock. —[Alex Webb](mailto:awebb25@bloomberg.net) The big story The Financial Conduct Authority, a top UK regulator, outlined fresh guidance to “finfluencers,” or influencers who offer financial products on social media, noting they [must provide proper risk warnings](. Breaching the rules is considered a criminal offense, and violators could face as much as two years in prison. Get fully charged An audit at Clorox warned of systemic cybersecurity flaws within its plants in 2020 — three years before [an attack disrupted manufacturing](. Apple is expected to unveil its AI strategy during the [Worldwide Developers Conference on June 10.]( Amazon is expanding same-day prescription drug delivery [to New York City and Los Angeles.]( Canada will toughen foreign investment rules for [AI, quantum computing and space technology.]( Apple, Google and Meta must solve EU concerns during the course of [a 12-month probe.]( More from Bloomberg Bloomberg Technology Summit: Led by Bloomberg Businessweek Editor Brad Stone and Bloomberg TV Host and Executive Producer Emily Chang, this full-day experience in downtown San Francisco on May 9 will bring together leading CEOs, tech visionaries and industry icons to focus on what's next in artificial intelligence, the chip wars, antitrust outcomes and life after the smartphone. [Learn more](. 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