Truth Social: why Donald Trump’s social media ‘meme stock’ surged and fell by over US$1 billion within a week

By Larisa Yarovaya, University of Southampton

Donald Trump’s social media platform, Truth Social, went public on Tuesday March 26. Shares in parent company Trump Media & Technology Group surged 15% after its first day of trading on the Nasdaq stock exchange, adding US$1.1 billion (£876 million) to the company’s value.

Trump wrote “I LOVE TRUTH SOCIAL” on the platform, echoing the sentiment of “I just like the stock” from the GameStop share rally that occurred in January 2021. For those who do not remember the GameStop case, shares in the Texan computer games retail chain experienced an unprecedented surge in prices following the activity of retail investors on the social media platform, Reddit.

Millions of investors from Reddit’s WallStreetBets community pushed GameStop shares from US$20 to US$480 during the January “short squeeze”, in which they drove some hedge funds into heavy losses after forcing them to liquidate massive bets against the stock. The power of small, amateur investors to outplay Wall Street giants was celebrated all over the internet, and even inspired the 2023 film Dumb Money.

It appears that the Trump Media stock is yet another example of a so-called “meme stock”, whose popularity is driven by social media activities and memes posted on various platforms, such as Truth Social.

However, while similarities with GameStop are apparent, the Trump Media movement looks unlikely to be as successful. On Monday April 1, less than a week after it began trading, shares of Trump Media fell by more than 20%.

Meme stock explained

The social media hype around GameStop originated from within a community of retail investors that took a “David v Goliath” mentality. The firm behind Truth Social has tried to cultivate a similar sentiment of “small guys” resisting Big Tech censorship.

Devin Nunes, the CEO of Trump Media, stated: “As a public company, we will passionately pursue our vision to build a movement to reclaim the internet from big tech censors”.

Read Full Story https://theconversation.com/truth-social-why-donald-trumps-social-media-meme-stock-surged-and-fell-by-over-us-1-billion-within-a-week-226791