The Trump stock bubble

Serial sex abuser Donald Trump (SSAT) seems to be about to receive a huge financial windfall at exactly the moment when he most needed it, when he is facing a multitude of huge fines as a result of losses in sexual assault and fraud cases.

The windfall comes in the form of a merger between his social media company Trump Media & Technology Group (that is behind his social media site Truth Social) and a financial shell company, Digital World Acquisition. That combined company went public and as of Friday, it had a market capitalization of close to $8.4 billion, with SSAT’s share being around $4.9 billion.

It boggles my mind that a company that has been running at losses ever since it started could be valued so highly. John Cassidy writes that this has all the marks of a classic bubble stock that has no underlying values but whose price is kept high largely by small investors’ support, who are maybe thinking that the value of the company will rise if SSAT is re-elected.

But these kinds of meme stock can fall precipitously and so the betting is that SSAT will try and cash out as quickly as he can, leaving the suckers with the loss. Cassidy explains what might happen.

The obvious move is to sell some of the shares that he owns, but doing this isn’t so straightforward. Like most deals of this nature, the Truth Social–Digital World Acquisition merger has a “lock-up” provision that could prevent insiders from selling any stock for five or six months. If the company’s board, which includes a number of Trump family members and cronies, tries to waive this provision, alarmed investors could tank the stock before Trump has a chance to cash out. James Mackintosh, a Wall Street Journal columnist, conducted a caustic examination of other ways in which Trump could theoretically exploit his current position to raise cash, such as using his stock as collateral for new bank loans, forcing Trump Media & Technology to pay him large licensing fees on the grounds that the company would be worthless without his name attached to it, or even having Trump Media buy Mar-a-Lago for a princely sum. None of these options would be unproblematic, but Mackintosh advised Trump, “Get as much cash out as quickly as you can, before the memes evaporate.”

It’s safe to assume that Trump is already thinking along these lines. Likely, he’s still figuring out what to do. On the one hand, he’s often ridden his luck before, and in financial terms he’s never had a potential bonanza quite like this one. On the other hand, he must know that a wrong move, or a shift in over-all market sentiment, could prove extremely costly. During a stock bubble, as the late economist Paul Samuelson once remarked to me, we are dealing with the physics of avalanches.

One has to grant that SSAT has been lucky, starting with a wealthy father who bankrolled his start in business, and he has been able throughout his life to bluff his way out of trouble.

Seth Meyers takes a closer look at this stock bubble.


  1. Pierce R. Butler says

    If that $8,400,000,000 came out of the wallets of small(er) investors -- and particularly if it never goes back in -- I predict a significant revenue drop at megachurches, ammo shops, and pay-per-view porn sites.

  2. Dennis K says

    Quite a bit of uncanny valley in the Trump snippets. Either AI enhancement or a toned-down spray tan and artificial eyebrow bushes.

  3. sonofrojblake says

    “It’s safe to assume that Trump is already thinking along these lines”

    For a given broad definition of the word “thinking” … Someone else is doing the thinking… but who?

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