The Historical Financial Performance of Donald J. Trump’s Companies: A Look Back at Trump Hotels and Casino Resorts and the Implications for Trump Media & Technology Group
Introduction:
Starting Tuesday, March 29, 2022, Trump Media & Technology Group (TMTG) will officially begin trading on the Nasdaq under the ticker symbol DJT. The name of the company is an acronym for Donald J. Trump, reflecting its purpose – providing a platform for the presumptive Republican nominee following his suspension from major social media sites. TMTG’s main product, Truth Social, was created as a response to Trump’s ban from popular social media apps in the aftermath of the January 6, 2021, US Capitol attack.
History Repeats Itself: Trump Hotels and Casino Resorts
DJT is not the first publicly-traded company with this name associated with Donald J. Trump. Back in 1995, he bestowed the same initials on his Atlantic City casino business, Trump Hotels and Casino Resorts. The company’s financial performance did not go well, with massive losses leading to its bankruptcy in 2004. Despite owning premier Atlantic City casinos, including the Trump Taj Mahal, the company never turned a profit and left investors in the red with over $600 million in losses.
Trump’s Financial Gain
Despite the company’s overall financial loss, Donald J. Trump personally made substantial gains during his tenure as the company’s leader. Between 1995 and 2004, he received approximately $40 million in salary, bonuses, and options – not unusual for a CEO. Additionally, Trump’s income came from less common moneymaking methods, such as consulting contracts, licensing deals, and reimbursements for the use of his personal jet and golf courses. These atypical payments accounted for around half of the money Trump earned during this period.
Bankruptcy’s Aftermath: Trump Entertainment Resorts
Following bankruptcy, the company was rebranded as Trump Entertainment Resorts and traded under a new ticker, TRMP. However, this name change did not help improve the company’s financial situation. It lost another $2 billion over five years and filed for bankruptcy a second time in 2009.
Market Enthusiasm and Valuation Concerns: Trump Media & Technology Group
Despite the uncertain financial prospects of TMTG, it has enjoyed market enthusiasm following its merger with Digital World Acquisition Corp. (DWAC). Shares of DWAC surged 40% on March 28, 2022, and have increased over 170% since October 2021.
Questionable Valuation: The Fundamentals of Trump Media & Technology Group
A closer look at TMTG’s fundamentals raises concerns about the stock’s valuation. The company generated only $3.4 million in revenue through the first nine months of 2021, according to SEC filings. Given these financials and the stock’s current price, Yale law professor Jonathan Macey asserts that the stock is “a bubble” with no rational investor willing to hold it for an extended period.
Shrinking User Base: The Decline of Truth Social
Another cause for concern is the shrinking user base of Truth Social compared to its predecessor, X (formerly known as Twitter). With Trump’s stake valued at around $4 billion, selling a significant portion of his holdings to cover the modified civil fraud bond obligation of $175 million following the merger might be an option for him, depending on the company’s board’s decisions regarding the lock-up period.
Conclusion:
The historical financial performance of Donald J. Trump’s companies, namely Trump Hotels and Casino Resorts and Trump Entertainment Resorts, raises questions about the future prospects of Trump Media & Technology Group. The company’s stock has enjoyed market enthusiasm following the merger with DWAC, but its fundamentals suggest it is significantly overvalued. Additionally, Trump’s stake in TMTG could present an opportunity to cover his modified bond obligation if the company’s board allows it.
