Former President Donald Trump lost $1.3bn in his net worth in a single day after his social media stock took a massive plunge.
The Trump Media & Technology Group, the owner of Truth Social, saw its share price decrease by 22.3 percent on Wednesday. That’s the company’s worst one-day loss since it went public in March, CNN noted.
The stock closed at above $51 on Tuesday, with Trump’s stake in the company valued at $5.9bn. That figure had dropped to $4.6bn by the end of Wednesday, a drop of $1.3bn.
It remains unclear what caused the share price to drop, Trump Media hasn’t shared any major announcements that could explain the downturn. The share price has become a barometer for how some traders think the election will turn out.
A number of traders blamed the nosedive on technical issues and a decrease in momentum for the meme stock.
But the stock has been volatile throughout this year and it doesn’t require official corporate announcements to see spikes or downturns.
From September 23 until the closing of the markets on Tuesday, the stock had quadrupled in value, pushed on by Wall Street bets that Trump will win Tuesday’s election.
The increase saw Trump Media’s evaluation shoot up to $10.3bn before closing on Tuesday, meaning that it was worth more than Elon Musk’s X for a short period. X has lost 80 percent of its value since the billionaire bought it, Fidelity has estimated.
X has about 70 million active monthly US users, compared to Truth Social’s 698,000 monthly active US users.
Threads, the recent addition to the field of micro-blog apps, has 20 times the number of users of Truth Social, Similarweb has found.
Trump Media’s value isn’t based on its business fundamentals – it recently passed Paramount Global, the owner of CBS, in market value.
While Paramount has brought in $14bn in revenue this year, Trump media has taken in $1.6m.
A senior equity analyst at Wedbush Securities, Dan Ives, told CNN: “Fundamentally the valuation is a head-scratcher but we have seen other meme stock narratives like AMC and GameStop on similar paths the last few years.”
He added: “Truth Social is a fraction of X and other social media platforms in terms of users but with an election a week away this stock has become a litmus test for some investors on the White House race.”
