Tim Schäfer invests primarily in stocks from the USA and Germany. We asked what he thinks about the new Trump stock. Getty Images / sittipong phokawattana / Tim Schäfer
Trump Media, the parent company of “Truth Social”, starts on the stock market with strong price fluctuations.
The share price rose by 56 percent, reaching 78 US dollars (around 72 euros) before falling again to just under 58 US dollars (around 53 euros) on the same day.
Tim Schäfer, a financial journalist and stock market billionaire from New York, told Business Insider that Trump Media’s valuation makes “fundamentally no sense” and is based on Trump’s loyal following.
Donald Trump’s media company recently went public and is already attracting a lot of attention.
Trump Media is the parent company of “Truth Social”, the former US president’s controversial social media platform. His share experienced a real rollercoaster of emotions when it debuted on the stock market. Immediately after the stock market launch, the share price jumped by a whopping 56 percent and reached 78 US dollars (around 72 euros) before it was briefly paused due to the violent price fluctuations. At the end of the day the price was 57.99 US dollars (around 53 euros) – still a proud increase of 16 percent.
This ups and downs during its stock market debut in New York raises questions: How seriously can you actually take this stock? A man who may have the answers to this is Tim Schäfer. He has lived in New York since 2006 and has his finger on the pulse of Wall Street, which he reports on on his financial blog “Tim Schäfer Media”. He told us what he thinks of this stock.
Schäfer is considered a value investor and therefore prefers stocks with good fundamentals such as profit and sales growth rather than mere share price growth. Can this also be seen here with Trump shares? “The price jump and the valuation cannot be justified fundamentally,” he said when asked by Business Insider. “It’s the craziest thing I’ve ever seen.”
According to Schäfer, the numbers make less sense for growth-oriented investors. “The market value corresponds to 2,000 times sales, which is absurd,” he says. According to Reuters, Trump Media’s valuation at the time of its IPO was around eight billion euros – 2,285 times the sales of the first three quarters of last year. “Not even the meme stocks or other hyped securities come close to that.”
From Schäfer’s point of view, such values would make “fundamental no sense”. “At the same time, the loss piled up to 49 million US dollars (around 45 million euros),” he says as another negative point. “It’s crazy.”
Schäfer explains the reason for the stock’s initial rocket launch with one component: Trump’s loyal following. “It may be because Trump’s supporters are blindly buying the stock without apparently giving any thought to valuation metrics,” he explains.
When asked whether Schäfer would buy the stock himself, Schäfer answered firmly, “No.”
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