The tremendous surge in the shares of DJT, the stock symbol for Donald J. Trump’s social media company Truth Social, has been widely characterized as a meme-driven phenomenon.
The stock has been riding high on what some perceive as an overly optimistic belief that Trump will emerge victorious in the presidential election – a scenario that could supposedly benefit the financial performance.
However, On The Money has obtained information suggesting that there could be a different reason behind some traders’ decision to purchase – and possibly hold onto – DJT shares even in the event of a Trump defeat.
Reports circulating within Trump’s inner circle have indicated that there is speculation about Elon Musk, a staunch supporter of the MAGA movement, potentially integrating Truth Social into his own social media platform X, formerly known as Twitter, sooner rather than later.
Although I have not personally confirmed this speculation with individuals capable of making such a deal happen – namely Musk or Trump himself, both of whom are currently preoccupied with election activities – there is a buzz within Trump’s circles, including individuals associated with Mar-a-Lago.
While discussions about a deal may be plentiful, merging two distinct entities and determining a mutually acceptable valuation poses a different challenge.
Would Truth Social operate as a subsidiary of X specializing in micro-blogging, or would it be completely absorbed by Musk’s platform?
Moreover, the actual value of Truth Social remains a point of contention. Following a remarkable surge of over 230% in the past month, DJT’s market capitalization reached $10.6 billion before retracing to approximately $7 billion post sell-off, reflecting the inherent volatility in pricing such assets.
Musk, being one of the wealthiest individuals globally with a net worth nearing $300 billion, does possess significant financial resources.
However, a substantial portion of his wealth is tied up in Tesla’s stock, necessitating potential share sales to fund the acquisition of DJT, a move that might not sit well with Tesla shareholders who have weathered fluctuating stock prices and recently experienced noteworthy gains.
It’s worth noting Musk’s history of shrewd deal-making, exemplified by his purchase of Twitter in 2022 for $44 billion – a transaction perceived by some as overpriced given Twitter’s modest profitability and user base compared to the acquisition cost.
Given Musk’s aversion to overpaying, it remains uncertain if he would be willing to allocate upwards of $10 billion, potentially more with a premium factored in, for Truth Social, particularly considering its financial performance and the speculative fervor underpinning DJT’s recent market behavior.
However, given Musk’s alignment with the MAGA movement and the prospect of a mutually beneficial relationship with a Trump administration, there remains a possibility that he might be inclined to pursue such a deal, regardless of the election outcome.
