Meme Stocks 2.0

Investment Note #13 - 17th May 2024

Meme Stocks 2.0


  • You’ve likely heard of Donald Trump’s social media platform, Truth Social. You may have seen headlines that its stock shocked Wall Street with its much-hyped IPO in March this year. Or since going public the stock has been on a wild ride, jumping from extreme highs to bruising lows.

  • But how many of us know what Truth Social is really like? Judging by the platform’s relatively low number of active users, it appears a mystery to many.

  • For this investment note, we will look at the company Truth Social, and whether its “meme stock” status is justified. What are the characteristics of a meme stock vs traditional stocks and what role might the company play in Trump’s presidential campaign?

  • Could the company reflect the beginning of a new investment craze where famous individuals take companies public, and the value is directly tied to their personal brand?

What is Truth Social

  • Truth Social launched in February 2022 as a social media platform owned by Trump Media & Technology Group (TMTG) after Trump was banned from Twitter and Facebook following the insurrection at the U.S. Capitol. He has since been reinstated on both, though he prefers to ‘truth’ rather than ‘tweet’.

  • Trump Media & Technology Group, which owns Truth Social, went public via a special-purpose acquisition company (SPAC) in late March of this year. A SPAC is a shell company that goes public with the intention of buying an actual company later. In this case, the shell company, Digital World Acquisition, purchased TMTG.

  • Recent estimates from Similarweb show Truth Social has roughly 5 million active monthly users, compared to X’s (formerly Twitter) estimated 368 million monthly users or Facebook’s 2.9 billion. Advertisers like lots of users, and the platform’s ads — or lack thereof — are indicative of the challenges Truth Social has faced in finding companies willing to spend on Trump’s platform.

  • Trump’s posts from his @realDonaldTrump account (7.01 million followers) are the backbone of the Truth Social experience and illustrate what really sets it apart from other social media outlets. This site has a star, and he garners far more adulation than heat.

Financial Lifeline

  • Truth Social’s performance has major implications for Trump’s finances. When TMTG started trading on the Nasdaq, it surged to a c.$8 billion valuation.

  • Trump, who owns roughly 58 percent of the company, was suddenly billions of dollars richer on paper, giving him a financial lifeline as he faces heavy bills tied to the civil and criminal cases against him, in addition to a well-documented funding gap against Joe Biden for his 2024 presidential campaign. Biden is said to have $192m, compared to Trump’s $93m (source: Financial Times).

  • But Trump is unable to access the stock, at least for now. That's because Trump is subject to a so-called "lock-up" provision that bars him from selling the stock until September 2024, at the earliest.


  • This could change if Trump obtains a waiver or can find a lender willing to accept the shares as collateral. So, for now, it looks difficult for him to translate Truth Social's ‘value’ into liquid cash, and even if he succeeds, it will likely trigger a significant decline in the stock price for shareholders.

  • Since the IPO highs, TMTG’s share price has been on a wild ride, initially collapsing as it disclosed total revenue was just $4.1 million in 2023 and it had lost $58 million last year, wiping out over $5 billion in market value. The share price swung from over $70 on debut to as low as $22 in mid-April but has since been trending upwards, $53 at the time of writing (source: Bloomberg).

  • When the stock was near its highs, it was trading at roughly 2,000 times the company's annual revenue. That is a lot! Nvidia, the high-flying vanguard of the artificial intelligence revolution and one of the hottest stocks over the past year, is trading at about 35 times its revenue.

Is it a Meme Stock?

  • Meme stocks originated in 2020 and were primarily fuelled by commission-free trading offered by companies such as Robinhood, together with the significant growth of online investing communities.

  • A meme stock is a share of a company that quickly jumps in price due to the attention of a dedicated online following. Meme stocks usually gain popularity through discussion threads on community forum sites and social media platforms.

  • Without their cult followings, meme stocks are not necessarily valuable assets. These online communities, such as the popular Reddit forum WallStreetBets, coordinate buying and selling efforts to influence stock prices. With enough online support, meme stocks can maintain elevated stock prices regardless of the underlying company's worth.

  • GameStop is regarded as being the first meme stock, traded feverishly by retail and individual investors during the Covid era. Many names have since followed in its footsteps like Bed Bath & Beyond, Virgin Galactic and AMC. Now the performance of TMTG has led several analysts to categorise it as a meme stock.

  • Just this week there has been a surprise reawakening of the meme stock phenomenon as GameStop’s legion of meme stock traders came roaring back to life - all it took was a cryptic post on X by Keith Gill, alias “Roaring Kitty,”  a day trader whose videos during the meme-stock bubble encouraged millions of others into the market. On Monday GameStop’s share price increased 74%, a market capitalisation increase of almost $4 billion (source: Bloomberg).

  • Investors in TMTG definitely have a lot in common with those in previous meme stock bubbles, with the initial enthusiasm around Trump Media’s public debut likely driven by Trump fandom, and much less so by the underlying business. The same can be said for meme stock “investors” where the fundamentals of a business matter little, but the idea of ‘fighting’ for a cause takes centre stage.

New Investment Trend?

  • GameStop investors were mocked by financial experts, but the masses’ collective action proved shockingly powerful: they pushed GameStop’s price from under $3 to a high of $483 in late January 2021, causing the hedge funds that had bet against it to lose billions of dollars.

  • Just as GameStop investors wanted to stick it to Wall Street, Truth Social investors may want to do the same to the Democrats, with profit-making an added bonus.  People might buy Trump Media not for future cash flows but because they feel an affiliation with the asset.

  • But could we see similar ventures in the future where insanely famous people (think Kim Kardashian, Tiger Woods etc.) take companies public based on the goodwill of their name, brand etc?


  • The financial figures of TMTG show a stark contrast between Trump Media’s highly hyped investor-driven valuation and the reality of its business performance.

  • Many thought meme stocks were a thing of the past consigned to the Covid era, but events this week suggest they are still alive with a burst of momentum brought on by social media activity.

  • Truth Social may be the dawn of meme stock 2.0 with celebrity/political status being the main focus. Maybe it becomes a way to express investors’ beliefs and commitments - taking a directional bet on the value of a person’s brand.

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