There is no end to the strangeness in the American stock markets, this week's one is above all. The annual turnover of the media company, which Donald Trump went public this week, is 3.5 million dollars. The loss is $40 million annually, the value of the company is $7.8 billion. Is a company with a turnover of 3.5 million dollars worth 7.8 billion dollars? Of course it won't, but it might when Donald Trump is involved. Trump, who has had trouble with the American judiciary lately, pulled a rabbit out of his hat again this week and held a magnificent public opening. The value of the company continues to increase. The increase in value continues even before the stock market opens. So what's going on? What is this company? Why did Trump make this public? Why did such astronomical values occur? It will be of great interest to you, but it is not investment advice at all. By the way, I wouldn't invest in Trump companies anyway. But the story is beautiful.

We need to rewind the story a bit. Trump lost the last election in America, and then his supporters marched to the White House. The famous White House raid took place, and Trump was greatly ostracized in America. He was banned from all social media. Although Twitter has opened now, he does not go back there, and when social media was banned, he could not find any other solution, so he created his own social media. Truth Social has decided to take the company public in 2022. Since the company's financial statements and accounting standards were not yet suitable for going public, it entered into a spec agreement. Spekler is a privately held company in America. They literally piggyback on businesses like our Donald Trump's companies and open them up to the public. After a while, these two companies merge. As of yesterday, this merger took place and Trump's media company acquired its own stock ticker symbol, DJT.

It was previously traded with DWAC. The stock had risen nearly 200% since the beginning of the year. When it got its own abbreviation after this merger this week, it became an official Trump company and the stock jumped up by 40% during the day. It went up so fast that a circuit break occurred due to extreme volatility. Later, the stock slowed down a bit and closed the day with a 16% increase. At closing, the company's market capitalization was $7.8 billion. How do we know, Truth Social, which has a turnover of only 3.5 million dollars, has never made any money in its life, and probably will never make any money, has a total of 3 million subscribers. There are 500 million subscribers on Twitter. Twitter isn't making money yet. These two structures are very similar to each other. Donald Trump probably has no intention of making money from this anyway. But despite this, the company reached such a tremendous valuation.

So what happened to reach such a valuation? It is obvious that there is serious speculation involved. Some of it is political speculation, Trump supporters are coming there and supporting Trump. There are certain limitations on election aid in America. Here, the citizen has found a way to overcome that limitation. Because the main shareholder of the company is Trump, and as its value increases, Trump also becomes richer. The second group, of course, are heavy speculators, they say that the shares can go up a little more, let us be in it and then sell it to someone else at a higher price. A third group is called Short Sellers, that is, those who sell the stock short. They believed that the stock would always fall from the first day and they sell the stock short. What does short selling mean? You go and borrow your shares from someone. Of course, no one gives it away for free with interest, so you sell it in the market, and then if the share continues to fall further, you buy the share back from below and give it to the owner. The money in between becomes your profit. But if the stock starts to rise rapidly after you short sell it, you're on the hook.

Because you have to give back the stock you borrowed. The stock rises so much that it even exceeds the price you borrowed it from. You panic and get into the stock, and after a while, short sellers actually become the fuel of the rise. They call this short squeezing, so we can understand it as taking the life out of short sellers. 3 million Trump supporters are organizing on Truth Social and saying they will destroy the short sellers. As short sellers increase, they also increase the price of the stock. Thus, short sellers also join the rally. This pushes the stock upwards in a speculative manner. Similar things have happened before at Gamestop and AMC. This short squeezing in Gamestop reached such a level that hedge funds that sold the stock short went bankrupt. There is even a movie about this, about how individual investors organized this business and bankrupted huge hedge funds.

This is the reason for the rise of the stock, but of course it is a very dangerous stock. Trump is already a 58% shareholder, so he may sell his shares one day. There are some limitations with it. We'll get to that in a bit, but there can always be a way to get over it. If there is a share sale of that size, of course the price of the share will go down. This is a company that has never made a profit, and it probably will never make a profit, and on the other hand, Trump may one day get bored of social media and go to Twitter because there are more people. Don't forget that Trump is also a presidential candidate preparing for the elections. Of course, the audience you can reach on Twitter is much larger. It could ruin this company again. On the other hand, yesterday's successful public opening was like a cure for Trump. Trump is in a lot of trouble in America. There are currently 3,500 lawsuits against him, and a significant portion of these cases are cases with financial burdens.

As a matter of fact, he lost a case in New York two weeks ago and the judge demanded that Trump pay back the $480 million he borrowed and repay the bond. Because the assurances behind it are not real, they are not true, he said. Trump experienced great panic. Because he does not have that kind of cash, and if he does not pay it back, all his assets in New York can be confiscated, which is where Trump's assets are located, famously his buildings. He panicked because of this. Then a higher court reduced this penalty to 170 million dollars and gave 10 days. That's when this public offering took place. If the company can maintain its current value at the end of the public offering, Trump has joined the 500 richest people in the world. Because his share before going public is around 4.6 billion dollars. Together with his previous wealth, he reaches a fortune of 6 billion dollars.

But of course, the value of this public offering has not yet been reflected in him. He cannot sell his shares for about 6 months. Although there is a way to overcome this, a waiver can be obtained from the board of directors and the general assembly. Then he can easily sell the shares. The natural risk of this is that the stock will fall very sharply in such a large share sale. Also, some other small investors may file lawsuits. As you can see, though, Trump is not a man who is afraid of litigation. If you wonder what the $7.8 billion valuation means, it might be a good idea to compare it to the New York Times. The New York Times' valuation is roughly the same. However, compared to Truth Social's turnover of 3 million dollars, the New York Times has a turnover of 1.7 billion dollars. While Truth Social has a loss of $40 million, the New York Times has a profit of over $120 million. It is also possible to look at other social media companies.

Recently the Reddit public opened up. Reddit has over 400 million users, turnover etc. is much higher. Reddit, such a volatile stock, has now turned into a relatively small and complete meme stock. So there's a lot of speculation on it right now. Momentum trade also has an impact on the stock's current rise. The algorithms of some major funds participate in such rapid rises. But after a while, the same algorithms can also switch to sales. Therefore, it is quite difficult to predict what Trump's stock will do. Considering that Trump is America's presidential candidate, we can say that interesting days are ahead of us. Yes, this short story I hope you were interested.

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