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Caveat emptor
Ske Jarzenske has voted for Trump three times. He had also invested 20% of his net worth in the Trump Media & Technology Group (TMTG). He does not say how he now feels about Trump’s policies. However, he acknowledges that buying TMTG was a poor decision. He also finds the Trump family’s indifference to his financial harm irksome. He said of his reversal of fortune, “It’s been very disappointing and difficult to watch.”
To prove his position, he showed Reuters a Charles Schwab statement showing he had lost 88.5% of his investment. He demurred about the dollar amount of his loss.
Misery loves company. Jarzenske is not alone. TMTG’s total investor losses now total $2.2 billion. And there is no silver lining. The company burned through cash trying to attract new investors. Its cryptocurrency holdings took a beating. Even hardcore boosters of the stock told Reuters they are losing hope as shares hit record lows.
To anyone familiar with Trump’s history, it is merely more of the same. His companies go bankrupt while he faces no consequences. In this case, his 114.75 million shares of TMTG, which he received without paying any cash in 2024 as part of Trump Media’s merger with a special-purpose acquisition company called Digital World Acquisition, are still worth about $460 million.
There’s more beyond TMTG. Investors in four major Trump-backed crypto projects – including the president’s meme coin, the Trump family’s crypto exchange, World Liberty Financial, its bitcoin mining operation, American Bitcoin, and a blockchain company, AI Financial – lost a combined $2.3 billion through April.
Investing in the Trump brand has caused at least $4.5 billion in investor losses.
The fact-based vs. faith-based analysis of a company
Of course, the Trump people didn’t agree with Reuters’ assessment of TMTG’s performance. But a look at the competing methodologies suggests who is telling the truth. Reuters reports:
“The Reuters estimate of investor losses is based on the performance of shares sold into the market by Trump Media, its predecessor entities, including Digital World Acquisition Corp. and Trump Media & Technology Group, as well as insiders such as the founders and management. The figure is also adjusted to account for share buybacks and based on company filings and court records detailing share issuances and sales.“
The media outlet adds: “The Reuters methodology is consistent with the mark-to-market accounting practices fund managers are required to use when calculating their performance, in line with the long-running Reuters practice for assessing investor losses or gains on shares and was reviewed by three finance professors who said it was the generally accepted way to assess investor gains and losses.“
Solid, well-researched and sourced, and vetted by disinterested professionals
On the other hand, Reuters reports TMTG’s version: In response to a detailed list of questions from Reuters, Trump Media said in an emailed statement: “TMTG has built a strong balance sheet and is focused on creating value for shareholders, including its proposed merger with TAE Technologies.” TAE Technologies is a nuclear fusion energy firm. (Essentially wishful thinking and immeasurable puffery. More to the point, nuclear fusion is not yet a profitable energy source.)
And adds: The company also vigorously disputed Reuters methodology, saying, “Your dubious, biased calculations misrepresent the facts, market dynamics, and TMTG’s public filings.” (Fact-free ad hominem)
As well as: “The company declined to specify flaws in Reuters calculations but its general counsel, Scott Glabe, said in a letter to Reuters that “millions of shares of Trump Media change hands in the public markets every trading day, and information about whether any given seller achieved a profit or loss is unknowable.”
The last one channels Trump’s previous career as a casino operator. Despite Trump’s failure in the business, casinos are profit machines. And it could be said that ‘millions of dollars change hands in the casinos every betting day, and information about whether any given bettor achieved a profit or loss is unknowable.‘
But casinos and publicly traded companies know the overall results. They can also extrapolate the effect on the average investor. In a company like TMTG, which has seen wild valuation swings, there will be winners. But when a stock that sold for $97.54 in 2022 now sells for $4.07, the vast majority of those stockholders will have lost a lot of money.
In 2001, when asked about his trading approach, Bernie Madoff replied, “It’s a proprietary strategy. I can’t go into it in great detail.” TMTG may have offered a little more detail, but certainly no more substance. Regardless, let the buyer beware.
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