Trump's "unified Reich" video controversy is a win for Truth Social

By Brett Arends

Donald Trump's 'DJT' stock, especially its warrants, should benefit from any controversy he stirs

Man, Donald Trump just mints free publicity.

Just look at the latest. Someone in his campaign staff on Monday reposted a fan's video on Truth Social, Trump's Twitter-knockoff social-media platform. The video contained, among many other words, some grayed-out text referring to a "unified Reich." It's so obscure I needed CNN to freeze the frame and zero in before I could even see it.

Cue a full 24 hours of mass media hysteria.

"Donald Trump is not playing games," Biden spokesman James Singer said on social media. "He is telling America exactly what he intends to do if he regains power: rule as a dictator over a 'unified Reich.'"

"This was not a campaign video, it was created by a random account online and reposted by a staffer who clearly did not see the word, while the president was in court," said Trump spokesperson Karoline Leavitt, per Politico.

Maybe Trump's campaign posted the video as a wink to neo-Nazis.

Maybe it was just a mistake.

Or maybe, just maybe, it was neither of those things. Instead, maybe it was done deliberately to jerk the chain of the media and produce the kind of hysterical, over-the-top reaction that carried him into the White House eight years ago.

You make the call.

But if we're going to see much more of this, it ought to benefit Truth Social. Every journalist will now presumably sign up for a Truth Social account so they can follow Trump's latest outrageous comments and then churn out easy, predictable, three-hankie articles about them. (Though technically you don't have to. You can follow them here.)

Actually, after this latest flap I tried to sign up for a Truth Social account myself, but due to some glitch or other it wouldn't let me. (Was it something I said, Donald?)

Truth Social's parent company, Trump Media & Entertainment (DJT), just posted its first quarterly results since listing on the stock market. For an investor looking for a serious company, they leave a lot to be desired.

Revenues fell 31% from a year ago to just $770,000 (yes, really), or about $8,500 a day. The company said this was because it was changing its advertising model. Mike Lindell and My Pillow might be in there somewhere.

Operations burned through $9.3 million in cash. Or, to put it another way, the company blew $12 in operating cash losses for every $1 it brought in as revenue.

Oh, and it warned that inflation, currently easing up in other parts of the economy, is going to hurt business ahead. "We anticipate that inflation will have an impact on our business going forward, including through a material increase in our cost of revenue and operating expenses in the coming years, if not permanently," the company said.

Uh-oh.

The stock fell about 10% to $44.

There are now 177 million outstanding shares in the company, so at these levels, it is still valued at a crazy $8 billion. That's more than 10,000 times the first quarter's revenues. Trump's personal stake, at these levels, is valued at just over $5 billion.

It's hard to make a plausible investment case for Trump Media & Technology stock at these prices, at least while keeping a straight face.

But as a short-term gamble? Ah, that's a different story. Trump, as I say, mints free publicity. And for a startup, especially a "social media" startup, publicity like this is worth more than gold. Trump Media & Technology stock is a bet on the Trump hype machine - until the election, if he loses, and through his second term if he wins.

There are so many caveats to this it's hard to know where to start. You could try here.

But if you want to take a gamble, the little-known warrants (DJTWW) remain a much better bet than the stock.

In the three weeks since I first pointed this out they've risen more than 25%, from under $19 to more than $23, while the stock has gone down. But they still look (relatively) like the much better deal. It makes no sense that they trade for $21 less than the stock.

The warrants are like a call option. When you own one of these warrants, you have the option to convert it later into a full share by paying an extra $11.50. That's an option - but not an obligation.

If the stock goes up, pay the money, convert the warrant to a share, and collect your winnings.

If the stock goes down, or goes to zero, just throw it away. And you've lost $23 instead of $44.

-Brett Arends

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05-21-24 1235ET

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