A media company co-founded by former President Donald Trump is now worth more than Elon Musk‘s X.
What Happened: Trump Media & Technology Group DJT currently boasts a market capitalization of roughly $10.3 billion.
According to the latest valuation metric from Fidelity, X is worth $9.4 billion. That’s a significant decline from its $44 billion valuation in 2022 when Musk acquired the company, then known as Twitter.
Fidelity, one of the investment firms that helped Musk take X private, maintains a $4.19-million stake in the social media platform via the Fidelity Blue Chip Growth Fund (FBGRX). That’s down from the $19.66 million initial investment — a 78.7% markdown over time.
Trump Media & Technology owns the X-like platform Truth Social. The company saw its shares jump over 50% in the last five trading days. They’re also up over 200% in the last month.
But ever since the company went public via SPAC merger in March, its stock has been highly volatile.
The company often trades as a proxy related to events surrounding the former president and the betting odds on his securing a victory in the 2024 presidential election. On Monday, shares of Trump Media & Technology were up 22% to $47.36. At last check Tuesday, they’re up 8.47% at $51.37 per share.
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Why It's Important: Comparing the two valuations may not be apples-to-apples.
Trump Media & Technology is likely elevated in valuation due to its proxy as a political trade. The stock could fall if Trump loses the 2024 election, the former president sells his stake, or after the election is over and investors take profits.
The company reported $837,000 in revenue and $2.3 million in interest income in the most recently reported second quarter. The company also reported a GAAP net loss of $16.4 million.
Trump Media & Technology doesn't regularly share Truth Social metrics. However, its user base is believed to be significantly lower than X’s. For comparison, Trump has 91.9 million followers on X and 7.9 million followers on Truth Social.
It's unknown what other investors value X.
Musk has recognized that he likely overpaid for Twitter. He also has grand plans to turn the company into his vision of a so-called “everything app” that will include social media connections, video, and financial payments.
After acquiring the company, Musk may have hurt the valuation by offering a lower price point on stock awards for employees. Months later, Twitter was valued at $20 billion when stock awards for the company's employees were announced in March 2023. While the valuation of the stock awards was less than half of the price Musk paid, the then-CEO said he was optimistic about the company.
“I see a clear, but difficult, path to a <$250B valuation,” Musk said at the time.
X is currently putting a larger emphasis on subscription-based revenue to diversify from the company's reliance on advertising revenue, which has plummeted since Musk took over.
With reports that Trump once tried to get Musk to buy Truth Social and a growing friendship between the two billionaires, it will be interesting to see how the valuations and competition from the two social media companies play out in the future.
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