Explosive: Is Trump playing a dangerous con with his Truth Social media company?
Truth Social just went public on NASDAQ.
In the first day or two of trading, news outlets are reporting Trump made billions.1
Accurate company financial numbers are hard to come by. But going public, with an Initial Public Offering (IPO), based on around 5 million users, almost no prior company income, and a debt of $50 million…that’s quite risky.
The debt is understandable; but not so few users. And you’d expect reasonable prior income.
I wouldn’t be surprised if the stock price took a drastic down turn at some point. That would leave many investors (ardent Trump followers) in the lurch.
It’s a strange situation. For every promise Trump makes about what he’ll do if elected President, more of his flock could be motivated to join Truth Social as users, and buy stock. Both actions would contribute to the valuation of his company.
So…even if Trump is making empty promises, his wealth would increase.
Is Trump violating ethical business practices? It would be foolish to think the Securities and Exchange Commission isn’t looking into that.
And again, selling stock based on so few users (compared to, say, Twitter or Facebook at the time they went public) strikes me as very shaky for investors.
Does Trump have support (investors in the wings) from people he did favors for when he was President? Pfizer comes to mind. After all, the Warp Speed program to develop a vaccine so quickly was Trump’s baby, and Pfizer (and Moderna) benefitted greatly. Pfizer did drop a million bucks on Trump for his inauguration. And Trump absolutely refuses to admit the vaccine is a catastrophe. He still pumps it up.
Speaking of potential investors in Truth Social, how about the deep-pocket Saudis? Their LIV golf tour has scheduled a few stops at Trump’s courses. What would they want in return for backing Truth Social?
I can think of one thing. If Trump happens to win the White House, he could find a reason not to resume oil fracking in the US. Instead, he’d buy lots of expensive oil from his Prince pals in Arabia.
Trump is a chronic deal maker and game player. His latest game, Truth Social, seems to have lots of holes in it. Going public on the basis of such a thin track record doesn’t make sense. Except, of course, for Trump himself.
Here’s a killer quote from Trump’s book, The Art of the Deal:2
The final key to the way I promote is bravado. I play to people’s fantasies. People may not always think big themselves, but they can still get very excited by those who do. That’s why a little hyperbole never hurts. People want to believe that something is the biggest and the greatest and the most spectacular. I call it truthful hyperbole. It’s an innocent form of exaggeration—and a very effective form of promotion.
Innocent exaggeration? Warp Speed? The COVID kill shot?
If I were wondering whether to buy shares in Truth Social, I’d read that above quote several times and THINK.
ENDNOTE 1: How would the SEC view Trump’s conflict of interest? Well, at a crucial moment in his company’s history—the launch of an IPO—he’s out on the campaign trail running for public office. He should be spending 18 hours a day shepherding Truth Social through this high-risk period.
Two, Trump’s political statements are irresponsible, because they will influence some investors to refrain from buying shares in Truth Social, and influence others to buy shares based on “politics rather than business.”
The SEC could view these two factors as Trump violating his fiduciary responsibility to Truth Social.
ENDNOTE 2: According to an article in The Guardian, Trump’s businesses received millions in cash payments from foreign governments while Trump was President. Democrats allege Trump as President provided favorable foreign policy decisions in return.3
ENDNOTE 3: In financial matters, is Trump reliable? Trustworthy? Consider this illustration: While on the Presidential campaign trail in 2016, he promised to put distance between himself and his businesses, if elected, to avoid a conflict of interest. After he won the election, he didn’t divest himself of those businesses or put them in a blind trust. Instead, he gave control of the companies to his sons, Don and Eric—and he kept ownership. Broken pledge. I’d say that’s in line with his belief that the business of America is business. Like his own businesses. Or like Pfizer and Moderna, manufacturers of the Warp Speed COVID kill shot.
-- Jon Rappoport
Red herring arguments. Going public is done to raise capital to grow the business, not to fleece the public. Now Truth Social has the capital to expand into other areas and compete in the world of ideas. Expect exactly that to happen. If it doesn’t and he just sells shares to raise personal wealth, then yes, it does not look good at all. However, go find a single company on NASDAQ that has a legit valuation right now. Zero. Everything is grossly inflated and the entire house of cards is held together by the helicopter money of the fed. The smart ‘investors’ have been selling stocks and buying land or gold or something real. Everything is way over priced and Truth is just one example.
Is he willfully ignorant or surrounded by bad actors that haven't told him the truth. I ask the same about my former doctor who still lies to this day.