The parent company of former President Trump’s Truth Social platform defied expectations in its first week on the stock market.

Trump Media & Technology Group stock closed at roughly $62 per share Thursday after a whipsaw week of trading. Shares of Digital World Acquisition Corp. (DWAC), the “blank check” company that Trump Media merged with last week, closed at $49.99 per share the day before the newly combined firm’s stock market debut.

Shares of Trump Media rose as high as $79.38 in their first week on the market before settling near $62 Thursday, the last day of trading before Easter. The company’s market capitalization was roughly $8.4 billion as of Thursday, according to CNBC data.

Despite its strong showing this week, the Truth Social parent had a less-than-stellar performance in 2023, generating just $3.4 million in revenue in the first nine months of the year and posting a net loss of $49 million in the same period, according to regulatory filings.

The mismatch between Trump Media’s strong market debut and the reality of its financials places it firmly in the “meme stock” category, experts said, arguing that enthusiasm for the former president appears to be a key driver of the stock. 

“This is a proxy on support for Donald Trump and nothing more, period,” Thomas Hayes, chair and managing member of Great Hill Capital, told The Hill. 

“I’ve never seen anything like it,” Hayes added. “But then again, you could say the same thing about Donald Trump.”

Former President Donald Trump speaks Thursday, March 28, 2024, in Massapequa Park, N.Y. (AP Photo/Frank Franklin II)

Jay Ritter, a finance professor at the University of Florida and an expert in initial public offerings, estimates that Trump Media stock is actually worth about $2 a share, based on the $300 million infusion from its merger with DWAC, which was finalized Monday.

The merger between DWAC and Trump Media was a major victory for the former president and his media company after years of setbacks and regulatory scrutiny. Trump owns 78,750,000 shares of the company, according to regulatory filings, which were worth nearly $4.9 billion based on Trump Media’s Thursday closing price.

“With its transition into a public company, Truth Social aims to robustly expand and enhance the platform, while vehemently defending the free speech rights of our users. We are leading an entire movement to reassert free expression in the digital space,” said Shannon Devine, a Truth Social spokesperson.

In a statement to The Hill, Trump campaign spokesperson Steven Cheung said Truth Social “is hot as a pistol” and “the only place, aside from speeches and interviews, where the American people can get President Trump’s message directly from him.”

The passion that Trump supporters have for the former president lines up with the “quasi-religious fervor” needed to fuel a meme stock, said Steve Sosnick, chief strategist at Interactive Brokers, a brokerage firm.

“You need a large group to have a belief in the company that goes beyond just normal investment criteria,” Sosnick said.

The concept of meme stocks first emerged in 2021, when a group of Reddit users encouraged people to buy shares of GameStop, a long-suffering video game retailer, driving up the price on professional investors who had shorted the stock.

AMC Entertainment, BlackBerry and Bed, Bath & Beyond also became part of the meme stock craze in 2021, as 20-somethings largely driven by nostalgia purchased shares in popular companies from their childhood, Sosnick said. 

“They’re no longer really investment decisions in the way that you think about the price-earnings ratio, discounted cash flow,” he said of meme stock investors. “All the things that people use to value a company become somewhat irrelevant. Because it’s about faith. It’s about being part of something bigger.”

In the case of Trump Media, it’s about supporting the former president.

“If you’re 30 or 40 or 50 percent of the country that wants to support Donald Trump, there’s no more effective way to do that than to buy shares in this company and hold those shares until the election period,” Hayes said. 

Trump owns roughly 58 percent of Trump Media, meaning he stands to make billions from the company. The money is currently unavailable to the former president due to a lockup provision preventing him from selling the shares for six months. 

However, Hayes noted that within six months — or earlier if Trump receives a waiver from the board — “he’ll have access to billions of dollars that he can pour into advertising, pour into the campaign, pour into his legal fees.”

As the former president prepares for a rematch with President Biden in November, his campaign has significantly lagged behind Biden’s in fundraising in the first few months of 2024.

Biden’s campaign raised $42 million in January, while Trump’s main committees only brought in $13.8 million. The former president stepped up his fundraising in February with just over $20 million overall, but Biden took in $53 million.

Trump is also facing a mountain of legal fees. His fundraising committees spent about $50 million on legal expenses last year. In the first two months of 2024 alone, Trump’s leadership PAC, Save America, spent more than $8 million in legal consulting fees.

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Civil judgments against the former president have also begun to add up. Trump’s lawyers said last week it would be “impossible” for him to secure a half-billion dollar bond in order to appeal his New York civil fraud case. The bond was ultimately reduced to $175 million.

The Trump Media rally showed some signs of losing steam Thursday as the stock fell 6.4 percent and closed $4.26 below its opening price that day.

But Sosnick said meme stocks can remain higher for much longer than people expect. Four years after the GameStop craze, the video game retailer still has a price-to-earnings ratio of more than 600, which Sosnick described as “obscene.”

“They sort of stick around at overvalued levels for longer than you’d think, again, because you have a cadre of very devoted investors,” he told The Hill.

Hayes cautioned against attempting to short the stock and “gambling on the staying power” of Trump’s supporters.

“I would say that betting against them is a bad move because they’ve shown that they are loyal through thick and thin,” he said.

“As much as the value of the business is detached from the price that it’s trading at in the market, do not underestimate the ability for more support and consistent support for as long as Trump needs it from his supporters,” Hayes added.