Originally published at: https://boingboing.net/2024/03/28/truth-socials-inflated-5-billion-valuation-will-leave-maga-minion-investors-broke-says-finance-expert.html
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As no doubt many people have pointed out, Musk turning Twitter into a Nazi bar has made Truth Social (along with Parler and Gab) redundant.
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"Also, writes Wolf, “there is Truth Social’s anemic user count: 494,000 monthly active U.S. users.”
Anyone care to wager on the percentage of bots?
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Also known as a “meme stock.” Like the GameStop bubble or an NFT of a badly drawn ape or a cryptocurrency, its value is based on nothing more than its investors’ collective insistence that it has value.
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░░G░R░A░B░░E░M░░B░Y░░T░H░E░░P░U░S░S░Y░ ░ I ░N ░ ░ B ░I ░O ░ ░
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The only thing that would worry me is that dRumpKit is smart enough to cash out quickly.
He might get to be a billionaire for once in his miserable life.
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Even if 0 bots, $10,000 per person???
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Can this perpetual catastrophe please finish al-fucking-ready?!?
I am so damn exhausted, and it’s only March.
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He’s currently prohibited from selling or pledging any of his “founding shares” for the first 6 months and even once the lockout period is over, the largest shareholder dumping huge blocks of shares is generally seen as a bad sign by investors.
However, the board can approve a waiver - which is probably likely since the board consists of sycophants and family members like Don Jr. and Nunes the Cow. But it’s a delicate situation as doing so is guaranteed to tank the stock price very quickly.
One analyst I heard speculated that a more realistic stock price is somewhere in the $2-3 dollar range which sounds about right given their current financials. I tried to buy some Put options for 6 months from now on Robinhood (basically shorting the stock) but it appears there’s a ton of others making the same bet and the option prices are still too high.
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That is somehow reassuring, particularly the part about the dickhead being locked in for a few months.
So, snark aside, thanks, I understood a bit of that.
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Oh please. Rational marketplace. Absurd valuations. I’ve lived through the dot-com bubble at the turn of the millennium. Pull the other one.
Not that I don’t want to see Truth Social and each and every one associated with it to crash and burn, mind you.
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Hopefully the house of cards collapses long before Trump can sell his share. That’s the important thing.
Sounds like it’s been a big problem from the start, despite there seemingly not being enough users to bother with the effort, but I guess if you’re running crypto scams, a high concentration of suckers makes it worthwhile:
Truth Social was meant to be a haven for conservative discussion. It felt more like Bot Social. For example, many of the replies to Trump’s solitary post were adverts for a niche cryptocurrency. And even popular hashtags turned up mainly bot-generated posts or non-organic content.
(That is some grim reading… Kyle Rittenhouse had the third most popular account?!)
There’s definitely some serious shenanigans going on with the money being pumped into it… I don’t suppose we’ll ever find who’s behind it.
Yes dammit, I want it to go back to being a sad money loser. It was going to go under this year, if they hadn’t had the cash infusion.
The stock price is going to tank eventually anyways - it’s not a functional business and never will be. The valuation is beyond absurd and can’t survive any sort of contact with reality. No one involved has any incentive to hold onto their shares because they’re just going to be worthless in short order, regardless of what they do, and they don’t care if they screw investors.
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bet the under. that’s the ticket.
short sell!
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Very true…however, it’s trading on a public exchange and in order to sell there has to be a buyer. Unloading tens of millions of shares in short order only works if there are enough ‘greater fools’ on the other end of the trade. They need to keep the share price propped up long enough beyond the lockout period in order to cash out. Tank it too early and he’s left with nothing but worthless paper.
It’s like robbing a bank…the robbery part is easy, it’s the getaway that’s tough to pull off successfully.
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493,999 / 494,000 = 0.9999979757%
Edited because maths
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I would appreciate hearing from someone who understands stock offerings to explain the whole mess. A guest on Ian Masters’ podcast tried to do so and what I think he said is that the valuation is imaginary paper value. Using fake numbers:
The newly-formed DJT offers a million shares of stock for sale. They pull a sale price out of their ass and says they’ll sell the shares at $10 each. They multiply $10 X a million and get $10 million. The company is now valued at $10 million, before even a single share is sold. Maybe the company only sells half a million shares. It’s still valued at $10 million, though, because a million shares are out there.
A little while down the line they put another million shares up for sale (for simplicity’s sake assume the price remains the same). Now there are two million shares out there, and by multiplying $10 X 2 million the company is now magically valued at $20 million. Real money is made only when a person waits until the share price rises and sells their stock at the higher price to some sucker who hopes the stock will rise again, after which that sucker tries to sell it to another sucker. In reality the company was never “worth $10 million.”
To the knowledgeable person: (a) Do I understand the process correctly? (b) If so, why isn’t this “valuation” fraud?
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Valuation is basically the total number of shares outstanding multiplied by the current share price. One million shares x $10/share = $10 million valuation.
But companies cannot just manufacture shares out of thin air. They can’t issue another million shares without diluting the pool of existing shares. Issuing another million shares would cut the share price in half so 2 million shares x $5/share is still $10 million. (these are known as stock splits and they only make sense when shares are trading very high and the dilution is worth it.)
When a company goes public, they set the initial offering price at some point (sometimes pulled out of their asses) - so it’s broadcasting to the market what the company thinks their valuation should be. It’s only when shares start trading and the actual share price is set by the market that a true valuation can be established.
In a normal business, these prices are based on fundamental financial principles like revenues and expenses. But that’s why DJT is a ‘meme’ stock because none of these fundamentals make sense and the shares are only trading high because of the hype. The share price will crash…the only real question is when (and will Tr*mp be able to cash out before it does).
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Shorting a stock is a risky move. The protagonists of the big short had to wait years to get a profit-=- and their short probably exacerbated the global financial meltdown.
And in this case, the bubble is based on a cult. In the waning days, HODL will be a test of loyalty among his acolytes, not financial sense.
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Because that’s how money works in the first place. The value of a dollar is tied to people’s intangible opinion of how much stuff they can buy for a dollar.
Or, as of this moment, 0.0000141438 of a bitcoin - which is really not based on anything tangible. Or I guess, in the case of Trump Media stock, how much democracy they can buy for a dollar,
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