Truth Social has made a splashy entry into the public market; following its IPO on March 26, the former president’s personal social media platform has quickly become a magnet for meme stock investors and a battleground for short-sellers.
Trump’s reclusion to Truth Social, and his conviction for purchasing the platform, came after he was banned from Twitter (now X) and Facebook following the January 6 Capitol riots.
Since its IPO, Truth Social has exhibited wild price fluctuations. The stock surged nearly 50% on opening day and has been bouncing ever since, double-digit percentage moves occur regularly, creating red days and green. Truth Social stock, initially priced at $66.22, plummeted to $22.84 in the first week; it has since established a steady climb up to its current close on Friday, $41.54.
On paper, however, Truth Social’s balance sheet leaves little room for ambiguity. “This company makes no money… It makes no sense,” said Elle Stange, an ad executive from Boise, Idaho, who made money from shorting the stock. She, like many others, is skeptical of the company’s long term prospects; Truth reported a staggering $58 million loss on just $4 million in revenue last year. Analysis conducted by the Associated Press estimated that it’s the short-sellers making money, they have already seen profits north of $200m.
The dynamics of Truth Social’s stock performance are influenced heavily by its cultural and political significance, particularly among Trump’s base. Chad Nedohin, a part-time pastor and ardent Trump supporter, exemplifies the other side of the market’s fervor. After the company went public, he celebrated on his livestream, dressed as a pirate and proclaimed, “We are now financial investors in him.” His unshakeable belief in Trump’s ultimate victory illustrates the primarily faith-based investment strategy that seems to drive much of the stock’s support from individual investors.
Professional traders, however, approach the stock with caution, aware of its susceptibility to sudden surges and dips. The phenomenon known as a “short squeeze,” where rapid price increases force short sellers to buy back stock to cover their positions, leading to even higher prices, remains a looming threat. Ihor Dusaniwsky, a short-selling expert from S3 Partners, warns, “If DJT starts rallying, you’re going to see the mother of all squeezes. This is not for the faint of heart.”
