The former US president may be caught in an odd loop structure: so long as he doesn’t try to get his hands on the cash, his notional wealth remains enormous. As soon as he does, it disappears. Sad!
Technically, Trump, who owns 57.6% of the company, can’t sell his shares for six months. But with that wealth on the books and the fact that his bond was reduced to $175-million, he was able to borrow enough to cover the bond. How does he manage to keep weaselling out of these problems? It’s mind-boggling. Of course, this is not the end of his problems; he is still facing three criminal trials and a total of 91 charges. And then there is a whole bunch of civil cases.
You may be forgiven for asking whether stock markets have gone completely mad The answer is both yes and no. But something has definitely changed. The person who really untangles this fabulously is Bloomberg columnist Matt Levine Stage Three happened, says Levine, perhaps three years ago with the sudden rise in GameStop’s share price. The rise ushered in the era of meme stocks, stocks that trade purely on sentiment and attention rather than anyone’s views about fundamental value. This is the crucial insight: the value of the company’s cash flows probably does set a real floor under a stock price, because if the stock is worth less than its cash flows, someone can buy the company and take the cash flows for themselves.
In some ways, the history of GameStop tells us all we need to know. GameStop was a popular retailer of computer games, so its clientele was typically young men who loved the undeniable thrill of blasting at imaginary opponents on their screens. They coalesced to support their favourite retailer and spread the word on the internet. In the context of a stock which has a very small turnover, the price started spinning, drawing more people into the fray.
What does this mean for Donald Trump Media? My guess is that everything depends on the chances that Trump will get elected. The people who want to identify with him will support the stock until his influence fades and I’m very much afraid that is not going to happen any time soon. But it might well tank if he loses the election and, conversely, it will surge if he is elected president.