In a dramatic turn of events, Donald Trump's social media venture, Trump Media & Technology Group (TMTG), has witnessed a significant decline in its stock market rally. The owner of Truth Social, TMTG saw its shares close below $17 on Wednesday, completely wiping out the gains it had made since its rapid rise in January.

Former President Trump, who owns a majority stake in the company, has been subject to a lock-up agreement that prevents him from selling his shares until late September. Although his stake is still valued at approximately $2 billion on paper, the company's overall worth has plummeted from $4.9 billion in March.

However, TMTG's business performance does not align with its high valuation. According to regulatory filings, the company generated sales of only $4.13 million in 2023, while suffering a loss of $58.2 million. Additionally, Truth Social, the platform owned by TMTG, is not experiencing substantial growth either. Estimations from Similarweb in March revealed that it had garnered around 7.7 million visits, significantly lower than X's (formerly Twitter) impressive 6.1 billion visits during the same period.

The downfall of TMTG's stock market surge can be attributed to its association with the "meme stock" phenomenon, where stocks experience volatile and unexpected rallies. Similar to the video game retailer GameStop, TMTG's surge attracted attention but ultimately led to a sharp decline.

The merger between TMTG and Digital World Acquisition Corp, a shell company, faced numerous legal hurdles before finally becoming a reality in March. During this process, Digital World's stock experienced a surge in trading volume. Memes circulating on Truth Social, ironically owned by the very company set to go public, further increased interest and drove speculation.

While the future of TMTG remains uncertain, Trump's personal fortunes could potentially be impacted due to pending civil trials, which may result in significant financial penalties. Trump Media has maintained that there are currently no indications of Trump planning to sell his shares in TMTG.

Despite being banned from Twitter and initially avoiding the platform upon his ban lift, Trump recently made a return to X, formerly Twitter, engaging in a lengthy interview with Elon Musk.

As TMTG's stock market rally fades, it serves as a reminder of the volatility and risks associated with meme stocks. The peaks reached during these rapid rallies often pave the way for steep declines, making it crucial for investors to exercise caution and conduct thorough research before entering the market.