The massive run up in shares of DJT, the stock symbol for Donald J. Trump’s social media company Truth Social, has been described by me and others as a meme-induced phenomenon.
The stock is buoyed by what some might say is an irrational degree of exuberance that Trump will win the presidential election – which in turn would, somehow, be great for the bottom line of a money-losing platform that will face stiff competition and a difficult business environment whether or not Trump takes the White House.
But On The Money has learned that there might be a better reason why some traders are buying – and maybe holding – the stock even if Trump loses on Tuesday.
People inside the Trump camp have been speculating for weeks now that Truth Social will at some point, maybe sooner rather than later, get subsumed by the mega-MAGA supporting Elon Musk, and his own social media platform X, formerly known as Twitter.
Full disclosure: I have not confirmed that speculation with anyone in a position to make the deal happen – neither Musk nor Trump himself – both of whom are a little busy these days trying to get The Donald re-elected as leader of the free world.
A lawyer for Musk and a Truth Social flack didn’t comment.
But there definitely is talk swirling around Trump World, including people who hang around Mar-a-Lago, that Truth Social is being eyed by Musk in terms of some sort of combination with X.
Deal talk is cheap, of course. Smashing two separate entities, and coming up with a price to make everyone happy is another story. Would Truth Social be a micro-blogging subsidiary of X? Does it get totally taken over?
And how much is Truth Social really worth? As shares of DJT have skyrocketed more than 230% over the past month, its market cap has grown to $10.6 billion, before settling down to around $7 billion after a sell-off. Volatility is hard to price.
Yeah, but doesn’t Elon have endless amounts of money to do what he wants? He is the world’s richest man with a net worth encroaching upon $300 billion.
But much of that is in the stock of the EV company he runs, Tesla. He would have to sell shares to buy DJT, which will probably piss off Tesla stockholders who have endured ups and downs in share price and have finally seen some extended gains over the past year.
Recall: Musk overpaid for Twitter back in 2022, shelling out $44 billion for something that at least on paper, is probably worth close to $4 billion. Twitter barely breaks even with 200 million daily users. Truth Social loses a lot of money, $160 million in the second quarter and has just a fraction of those daily users.
Musk, like most good businessmen, hates over-paying. It’s the reason why after the initial exuberance of buying Twitter and freeing it from the woke forces of prior management, he tried (in vain) to get out of the deal.
Is he ready to pay $10 billion plus maybe a premium depending on where shares settled out, for something that on paper might be worth $10 were it not for the MAGA-craze setting DJT shares on fire?
Come to think of it, maybe. Remember, Musk is now part of the MAGA faithful, and if Trump does become president he would have an even better friend in the White House to support his various ambitions that include government contracts for space travel and who knows what else.
And if Trump loses, what’s another $10 billion for a guy worth $300 billion?
