I do not really understand how the stock market works other than at the most naive level. I know that in theory, the price of a company’s stock should reflect the value of the company, so that if the company is making profits and pays good dividends to its shareholders, then the stock price should rise, while if it is losing money and risks going out of business, then its price should drop.
But in the modern world of high finance, there are many more factors that seem to be in play, such as the predictions of future earnings and profits and prospects for growth. Those can raise a company’s stock price even as it is losing money. And there are even more esoteric factors that only the mavens know about.
This brings us to creepy Donald Trump’s social media company Truth Social. I wrote back in April about how it merged with a publicly traded shell company Digital World Acquisition Corp and the initial value of the creepy Trump’s stock was a whopping $6.3 billion. But as economic journalist David Cay Johnson wrote, the underlying value of the stock was effectively zero since its revenues were a paltry $4 million while having an operating loss of $58 million.
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