Why DJT will not meet a similar fate as past Trump companies

The stock price of Trump Media Group (DJT) keeps surging, defying predictions of its collapse.

Trump’s companies have a history of failing, notably Trump Hotels and Casino Resorts which went public in 1995, but by 2004 filed for Chapter 11 bankruptcy and was delisted from the New York Stock Exchange. A lot of pundits are expecting a repeat performance for DJT. I think this time is different. DJT is not like Trump’s other companies.

There are several key differences:

-Trump’s brand is much bigger today, with a 2024 win on the possible horizon, compared to in the ’80s and ’90s.

-DJT can take advantage of ‘meme effects’, like seen with GameStop, that didn’t exist in the ’90s. This can mean more staying power and a buoyed share price of DJT.

-Truth Social carved out a niche of being a more-right version of Twitter. Given that Twitter, the weakest of the major social networks is worth at least $20 billion, this leaves a lot of room for DJT to keep surging, assuming a similar valuation as Twitter/X.

-More short sellers. This can mean a short squeeze and subsequent rise of DJT share price if they are forced to cover.

-A 2024 win, plus with hype and a possible/hypothetical partnership with Musk-owned Twitter/X, can mean lots of future opportunities for DJT.

One of the greatest mistakes of investing is following the herd, or what seems obvious. Wall St. has a recurring tendency of doing what is least obvious or least expected. The obvious assumption is that DJT will fail like Trump Hotels and Casino Resorts, but although history rhymes, it seldom repeats–or at least not as the consensus expects it will repeat.

No one in Feb/March/April 2020 during the depths of Covid, after the S&P 500 had dropped 30% in a month, that the stock market and GDP would stage one of its biggest recoveries and booms in history, with the Nasdaq nearly doubling in under 2 years. Who saw that coming? No one. Even I was not optimistic enough.

Often there are key but subtle differences that can result in totally different outcomes today compared to in the past. For example, Google in 2002-2004 was widely predicted to have a similar fate as Lycos or other failed search engines of its era. It didn’t. Google was so much more overwhelmingly dominant and profitable compared to Yahoo or Lycos, and also the World Wide Web as an industry/sector is so much bigger overall now compared to in the ’90s. Facebook in 2005-2010 was similarly predicted would have a similar fate as MySpace…it didn’t.