### Trump's Truth Social Plummets in Market Value, Losing $1.3 Billion in One Day

Trump Media & Technology Group, the company behind former President Donald Trump's social media platform Truth Social, saw its stock price plummet by 22.3% on Wednesday. This sharp decline marks the company's worst day since it went public in March, narrowly surpassing a 21.5% drop on April 1.

Following a recent surge that had driven the stock price over $51 by Tuesday's close, Trump's stake in the company was valued at approximately $5.9 billion. However, by the end of Wednesday's trading, the value had dramatically fallen to $4.6 billion. This translates to a staggering loss of $1.3 billion in Trump's net worth in just one day.

The reason for this sudden reversal remains unclear, as Trump Media did not release any major news that would justify the significant decline. Some traders attributed the drop to technical factors and a waning momentum for the stock, which has been the subject of intense speculative trading, often categorized as a "meme stock."

Between September 23 and Tuesday, the stock's value had quadrupled, driven largely by Wall Street bets on Trump's potential return to the White House. The gains had propelled Trump Media's market value to a peak of $10.3 billion, briefly surpassing the implied value of Elon Musk-owned social network X, formerly known as Twitter.

Despite this, X boasts about 70 million monthly active US users, compared to Truth Social's approximately 698,000, as reported by Similarweb. Even Meta's new social platform, Threads, has a user base around 20 times larger than Truth Social's.

Fundamentally, Trump Media's valuation is puzzling given its modest financial performance. The company has only generated $1.6 million in revenue this year. For comparison, CBS-owner Paramount Global, which Trump Media recently surpassed in market value, has earned over $14 billion in revenue this year.

Dan Ives, a senior equity analyst at Wedbush Securities, noted that Truth Social’s inflated valuation mirrors the trajectory of other meme stocks like AMC and GameStop. "Truth Social is a fraction of X and other social media platforms in terms of users but with an election a week away, this stock has become a litmus test for some investors on the White House race," Ives remarked.

Matthew Tuttle, CEO of Tuttle Capital Management, suggested Wednesday's selloff was due to the stock's failure to break through a key resistance level. Tuttle noted that sophisticated traders have capitalized on the volatility, making profits before exiting, leaving less savvy investors to bear the losses. He also explained that high costs to borrow shares for short selling have made it nearly impossible to bet against the stock. "It makes it virtually impossible to short this thing," Tuttle said.