Yeah, even setting aside the fact that those in the cult of Trump might well hold onto their stock for illogical reasons, there might be wealthy (but immoral) actors who buy tons of shares for perfectly rational reasons. All it takes is for the Saudis (as one potential example) to buy up some shares as a blatant bribe to Trump and your stock-shorting strategy would be doomed.
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.
Ironically, that’s one of the things keeping the price as high as it is. Having tradable DJT is valuable in part because you can loan it out to someone wanting to short it, and it is so hilariously overvalued relative to its fundamentals, people would LOVE to short it.
Thanks for the clarification. You too, Bfarnn.
Arguably that is true of the dollar as well…
It is, but putting faith in the continued existence of the US government seems like a better bet than putting faith in a digital spreadsheet representing the amount of currency someone paid for an ape drawing or the financial success of a Trump company.
that’s what i assume too. if nothing else this could serve as a legal money laundering and/or bribery scheme
i wonder how quick it will drop if he does. whether losing the election, or having a heart attack or something
I’m guessing someone is sending their laundry through this operation.
The amusing part is that a number of them are forked copies of Mastodon, but they still won’t federate with each other.
The rest of Mastodon doesn’t want to federate with them.
What if the US government is a Trump company?
This seems to be the strategy, for an interested group of people anyway?
Bribery, if anything. “The Saudis”, i.e. the branch of the royal family that’s currently in charge, already have their own autocratic country where they can have every law they’d like to have.
Truth Social was always and primarily a vehicle to transfer money to Trump and his partners. It’s the latest and potentially the most successful in a long line of Trump grifts.
I don’t know who set this up for him, but I do know that he’s not savvy enough to have planned either the technology (which is just necessary window-dressing to support the pretense that this is an actual tech company) or the financial aspects. He’s essentially licensing the Trump name – which is something he does regularly, and which is a process he understands very well – to someone else. Those are the people who designed Truth Social, and I am sure that they are not constrained by any lock-in period. At the first opportunity possible, they’re going to pull their investment and walk away whistling, before Donald has a chance to tank the share price by dumping his own investment.
The MAGA faithful who bought in are going to take the ultimate haircut, as the “savvy” investors take their profits and the share price plummets toward what it’s actually worth (which is close to penny stock territory). But it isn’t the faithful who pushed the share price up to its present wildly inflated price. That’s probably being driven by investors who think they see a chance to profit from a juicy meme-stock. Some of them will turn a profit, some of them will lose their shirts, depending on timing. There’s also probably quite a lot of money laundering in there, and I’d bet that a large part of Donald’s nominal holding has already been contracted to others: they gave him some fraction of what his shares are worth up-front, in exchange for a contract that says he’ll transfer the shares to them once he’s free to do so. Because everyone knows that the whole scam is a heartbeat away from a death spiral, they probably gave him quite a small fraction. That whole “Donald Trump stands to get $3bn!” stuff is hype that Donald is happy to have out there because it bolsters his claim to be a Financial! Genius! but he’s not going to make anything like that much. He should clean up pretty well, though, considering how little he has to do to earn it.
As always with pump-and-dump scams – which this is – the people running the scheme have ‘first mover advantage’. They know when the dump is coming, and have the freedom to pull their money out before the stock price goes to zero. Donald is possibly next in line; he won’t do as well as they will, but he’ll get some free money. Beyond that, the bloodbath starts.
Something about a fool and his money comes to mind.
Yeah, not so much. A bit of irony this kind of craziness (irrationality) happens as Daniel Kahneman passes away. His work with Amos Tversky just chewed up and spat out the idea of people always being economically rational.
The Undoing Project by Michael Lewis is a terrific read.
What would be HILARIOUS is if Trump just dumps all of that stock NOW, while it has that high of a price, tanking it and leading to the stock being worthless.
I don’t think he could even dump it all at a high price, but he could get something out of it. Because, yeah, there is no way this stock isn’t hugely over valued. They would be laughed out of the room if you went on Shark Tank with that valuation. People are going to lose a lot of money. I only feel sorry for some poor kid whose college fund is drained because their dad is in a cult.
It was originally pitched to him by two former contestants from The Apprentice. Naturally, he didn’t keep them around long enough to share the proceeds.
“Trump and Dump” 
I’m no “wolf of wall street” but even I know that the initial valuation was stupid high, that there would be an initial rush, then that bubble is going to burst once the speculators and the fan-boys have to face reality of it. The “base” is older, dumber, and not social media savvy. Unless advertisers are like “yep, this is a platform where they’ll buy ANYTHING” I can only imagine the amount of snake oil that gets pedaled there.
This isn’t quite right. When a company sells stock in an “offering”, there already are people who own shares (even if the company isn’t public yet, there will be founders and early private investors who already own it). So you take the value of the company (how that’s determined is a separate question) and divide it by the stock that’s already outstanding to figure out what a new share should sell for. When the company issues new shares, they’re dilutive of the existing shares in terms of the percentage of the company that each share represents, but the buyers are also paying cash to the company for them, so the value of the company is going up by the same amount and the $ value of each share shouldn’t change.
To take a very simplified example, imagine a company that has no liabilities and just one asset: a bank account with $50,000 in it. It’s pretty clear that company is worth $50,000. If there are 100 existing shares of stock outstanding in that company, each share is worth $500 ($50,000/100 shares) and represents a 1% interest in the company (1/100 shares). If the company then issues another 100 shares at a price of $500 per share, there will now be 200 shares outstanding, so each share will represent only 0.5% of the company (1/200 shares), but the company will now be worth $100,000 (the original $50,000 plus the proceeds of the share sale), so the stock is still worth $100 per share.
In the real world, valuation is more complicated. For an offering, it’s usually negotiated by the company and its bankers with big investors who want to participate in the offering (who usually are analyzing the company’s assets, liabilities, performance, and future financial prospects to figure out what they’re willing to pay for a share). The company isn’t selling stock to make money, but to have cash it can use to grow its business.
But none of this is relevant to what’s happening with DJT. Most of the time when people talk about stock prices (including in this boingboing post), they aren’t talking about the valuation in an offering (where the company is issuing new shares), they’re talking about the market price on the stock exchange, which is the price at which buyers and sellers (i.e., existing stockholders, not the company itself) are willing to trade the stock. Most people who own stock will never participate directly in an offering by the company, but will buy all their stock from other stockholders who are looking to sell.
DJT has actually never done a public offering. Trump Media was a privately held company until last week when it merged with a company called DWAC (which did have an initial public offering a few years ago to raise cash for the purpose of eventually buying another company like Trump Media). In the merger, Trump Media and DWAC negotiated a valuation for each company, and all the existing stockholders in both companies ended up with stock in the newly merged company that they could sell on the stock exchange (subject to lock-up agreements).
The “valuation” has gone up because buyers and sellers of post-merger DJT have been trading the stock at a price per share that implies a higher valuation than the valuation negotiated in the merger.
This is wrong. See above regarding offerings, where the company actually does manufacture shares out of thin air and sells them for cash.
A stock split is different. In a stock split, the company isn’t selling shares, but is simply changing the number of shares held by each stockholder (without changing the total percentage of the company that each stockholder owns). In a typical 2:1 stock split, everybody who owns stock in the company will suddenly own twice as many shares, with each share worth half as much. Companies do this to keep the stock trading efficiently and to make it easier to use stock for things like employee bonuses.
