The first half of 2024 has been a serious roller-coaster ride for Trump Media & Technology Group. Since the company behind Truth Social went public, its stock price has oscillated wildly—as high as $66 per share and as low as $22—sending the former president’s wealth surging and crashing along with it.
But according to LinkedIn cofounder Reid Hoffman, those fluctuations are minor compared to the massive gap between Wall Street’s valuation of Trump Media and the true value of the company.
“The Truth Social numbers are so absurdly out of the realm of normal business,” Hoffman told CNN, referring to TMTG’s market value, which currently sits around $6 billion. “That is wildly high,” he said.
TMTG went public in March at a stunning market value of $6.8 billion, despite earning just $4.1 million in revenue in 2023. (By comparison, when LinkedIn was acquired by Microsoft in 2016, it was valued at $26.2 billion, roughly eight times its $3 billion revenue. Meta, which is valued at around $1.3 trillion, posted more than $130 billion in revenues last year.)
Hoffman, who is now a director at Microsoft, told CNN that if Meta’s price-to-sales ratio were in line with TMTG, the social media giant would be valued at close to $150 trillion.
The last few months have been rough for Trump Media. Within days of going public, its value shot up to almost $8 billion, and its stock price surged. But its value plummeted after the company disclosed it had lost $58 million in 2023, dwarfing its total revenue for the year.
In May, TMTG took another hit when earnings showed it had lost over $300 million in the first quarter of 2024, which was primarily related to its merger with Digital World Acquisition Corp. Revenue for the first quarter was down from last year as well, at less than $775,000.
And as the company has continued to lose cash, there aren’t many available avenues to grow its audience. In February, Truth Social disclosed that it had had about 9 million user sign-ups across its platforms, making it tiny in comparison to giants like X and Snapchat, which have 550 million and 800 million monthly users, respectively.
More to the point, those sign-ups generally represent the small faction of people online who are ardent Trump supporters, which doesn’t make Truth Social very appealing to anyone outside the MAGA movement. Earlier this year, Michael Pachter, a research director at the wealth management firm Wedbush, told Fortune he estimated Truth Social had a maximum market of 75 million users, when it would need around 200 million to justify its valuation.
“Trump Media is probably more appropriately valued close to $40 million rather than several billion,” Hoffman said to CNN. “Truth Social is burning through hundreds of millions of dollars with nothing to show for it in user engagement, user growth, or even potential revenue.”
Hoffman, who has donated millions of dollars to President Joe Biden’s reelection campaign, isn’t the first expert to say that Wall Street is overvaluing Truth Social. When TMTG first went public, Jay Ritter, an IPO specialist at the University of Florida, said there was no way the company was worth what the stock price suggested, and that its price was “divorced from fundamental value.”
Other investors have compared Trump Media, which trades under the ticker symbol DJT, to meme stocks like AMC and GameStop, where value is driven more by popular sentiment on Reddit boards than thoughtful analysis of the company’s performance and potential.
