Donald Trump

[SkyBlueFlux]

I don't get it, how do they value it at that?

It is based on the price at which people are willing to trade the shares at (e.g. if I buy 1 of 1,000,000,000 shares for $5 then that implies the company is worth $5Bn). Like a lot of pump and dump schemes, there are plenty of fools who are easily parted from their money. The price doesn’t have to remotely reflect reality, the question is simply “can I sell this for a higher price later down the line”. The way these things usually work is they continue to bubble while there is hype and momentum, but as soon as the company hits some buffers or the hype dies down, the pool of buyers dries up and the bottom falls out of it very quickly as people scramble to recover their money.

We’ve seen this with a whole heap of cryptocurrencies over the last few years.

 

[SkyBlueFlux]

If there's a Ponzi element to it why wouldn't the SEC investigate it?

It is Ponzi in nature but legally distinct. That is to say, in a Ponzi scheme the company deliberately misleads people about the value of their investment. Here we have a nearly unprecedented situation where they’re not misleading anybody, the company’s financial accounts and product offering are out in the open, people are just being fucking idiots.

The SEC can stop companies from acting in bad faith, they can’t stop people throwing away their money for no good reason.

 

[MillionMilesAway]

It is Ponzi in nature but legally distinct. That is to say, in a Ponzi scheme the company deliberately misleads people about the value of their investment. Here we have a nearly unprecedented situation where they’re not misleading anybody, the company’s financial accounts and product offering are out in the open, people are just being fucking idiots.

The SEC can stop companies from acting in bad faith, they can’t stop people throwing away their money for no good reason.

it is quite odd that a company with no income and no prospect of significant income should be desirable.

I wonder what they spent 50+M dollars on last year. Orange spray?

 

[SebastianBlue]

If there's a Ponzi element to it why wouldn't the SEC investigate it?
What if group of Dems bought stock and were cleaned out by Trump they could go straight to the SEC and claim Ponzi scam?

It is actually under investigation by the SEC and is subject to several lawsuits from current and former shareholders (DWAC) and/or executives.

But those aren’t specifically scrutinising the Ponzi scheme nature of the “business”, as that is less obviously structured than other Ponzi schemes; they are focused on the operations, financing, public disclosures, and ownership compensation.

It takes time break these sorts of Greater Fool proofs within a legal framework. It is much more likely to be broken by the realities of the market before it is brought down to earth by regulators.

Of course, the fallout from the dump after this pump will be subject of investigations, as well.

It is Ponzi in nature but legally distinct. That is to say, in a Ponzi scheme the company deliberately misleads people about the value of their investment. Here we have a nearly unprecedented situation where they’re not misleading anybody, the company’s financial accounts and product offering are out in the open, people are just being fucking idiots.

The SEC can stop companies from acting in bad faith, they can’t stop people throwing away their money for no good reason.

See above — the SEC is actually investigating claims of both DWAC and DJT operating in bad faith (both in business and stock market actions), and several members of the current and former ownership groups have been charged and/or are under investigation.

 

[BlueMoonAcrossThePond]

It is Ponzi in nature but legally distinct. That is to say, in a Ponzi scheme the company deliberately misleads people about the value of their investment. Here we have a nearly unprecedented situation where they’re not misleading anybody, the company’s financial accounts and product offering are out in the open, people are just being fucking idiots.

The SEC can stop companies from acting in bad faith, they can’t stop people throwing away their money for no good reason.

From the Internet...

What Is a Ponzi Scheme?
A Ponzi scheme is an investment scam that pays early investors with money taken from later investors to create an illusion of big profits.

Trump's Truth Social IPO doesn't strike me as "Ponzi" in nature - it's a terrible investment for sure, but the elements of Ponzi are absent. In particular, the "illusion" part isn't present - it's a publicly traded stock with - supposedly - full disclosure of financials.

In contrast, a Ponzi scheme conceals financials: hence the "illusion of big profits" part of the definition above.

If one were to label Trump's stock as a Ponzi scheme, then so is every other stock that is over-valued.

 

[SebastianBlue]

From the Internet...

What Is a Ponzi Scheme?
A Ponzi scheme is an investment scam that pays early investors with money taken from later investors to create an illusion of big profits.

Trump's Truth Social IPO doesn't strike me as "Ponzi" in nature - it's a terrible investment for sure, but the elements of Ponzi are absent. In particular, the "illusion" part isn't present - it's a publicly traded stock with - supposedly - full disclosure of financials.

In contrast, a Ponzi scheme hides true financial worth: hence the "illusion of big profits."

It is a Ponzi scheme in nature because later investment in the stock—even as more shares are issued and sold—is propping up the value of the stock for early investors. Trump’s behaviour alone qualifies it as such, as his team will continually take action to maximise the value of his stake at the expense of all other shareholders, which it self is a violation of fiduciary responsibility (but, again, such violations have to be proven and prosecuted in a court of law, so it is rare they are stopped ahead of time).

And there is actually an element of concealment of true value of the company due to bad faith actions of its board pre- and post-merger (some of which have lead to SEC charges for misleading investors) and the murky nature of their financing sources and true underlying ownership.

DJT’s public financial disclosures cannot be trusted, which is one of the reasons why they are subject to an ongoing SEC investigation.

DJT is not like every other stock which is overvalued.

 

[BlueMoonAcrossThePond]

Bernie Madoff's Trust = Ponzi scheme. Actual financials misrepresented. Current investors paid by "borrowing" from later investors, creating the illusion of profitability. None of which was true.

Gamestop stock = not a Ponzi scheme. Actual financials plain to see. Stock price went way up as a protest against big-time investors who were shorting the stock. It was nuts to invest in Gamestock at the price the stock commanded - but all financials were plain to see.

Truth Social stock = not a Ponzi scheme. Bad investment for sure. Taking advantage of MAGAphiles - probably. But there's no element of concealment that I'm aware of. If Truth Social is a Ponzi Scheme - then so are, for example Apple, Amazon and Microsoft - and any other stock - which one deems to be over-valued.

Edit...
I think that the definition I hastily quoted in one of my posts above is a bit off the mark.

A key element of a true Ponzi scheme is that it's by its very nature unsustainable. The typical diagram used to depict a Ponzi scheme is a pyramid, with initial investors at the top.

The top of the pyramid relies on those below for profits. Layer 1 at the top is profitable because Layer 2 next below contributes to Layer 1. And Layer 3 contributes to Layer 2 which also helps Layer 1. And Layer 4, contributes to Layer 3, which... well, you get the idea.

Clearly, there reaches a point where Layer N cannot profit because there are not enough investors at Layer N + 1.

And this element is entirely absent from Truth Social's IPO which is why this isn't a Ponzi scheme. Truth Social's IPO may be plagued by numerous legal infractions - but it's not a layered, Ponzi scheme type of fraud.

Whereas the layered tier of investors was absolutely a part of Madoff's Trust - an actual Ponzi scheme.

 

[SebastianBlue]

Bernie Madoff's Trust = Ponzi scheme. Actual financials misrepresented. Current investors paid by "borrowing" from later investors, creating the illusion of profitability. None of which was true.

Gamestop stock = not a Ponzi scheme. Actual financials plain to see. Stock price went way up as a protest against big-time investors who were shorting the stock. It was nuts to invest in Gamestock at the price the stock commanded - but all financials were plain to see.

Truth Social stock = not a Ponzi scheme. Bad investment for sure. Taking advantage of MAGAphiles - probably. But there's no element of concealment that I'm aware of. If Truth Social is a Ponzi Scheme - then so are, for example Apple, Amazon and Microsoft - and any other stock - which one deems to be over-valued.

Edit...
I think that the definition I hastily quoted in one of my posts above is a bit off the mark.

A key element of a true Ponzi scheme is that it's by its very nature unsustainable. The typical diagram used to depict a Ponzi scheme is a pyramid, with initial investors at the top.

The top of the pyramid relies on those below for profits. Layer 1 at the top is profitable because Layer 2 next below contributes to Layer 1. And Layer 3 contributes to Layer 2 which also helps Layer 1. And Layer 4, contributes to Layer 3, which... well, you get the idea.

Clearly, there reaches a point where Layer N cannot profit because there are not enough investors at Layer N + 1.

And this element is entirely absent from Truth Social's IPO which is why this isn't a Ponzi scheme. Truth Social's IPO may be plagued by numerous legal infractions - but it's not a layered, Ponzi scheme type of fraud.

Whereas the layered tier of investors was absolutely a part of Madoff's Trust - an actual Ponzi scheme.

Elements of a Ponzi scheme as applied to DJT (keep in mind Truth Social is merely a part of DJT):

Misrepresentation of financials, including sources of financing, ownership, and intended market actions: Check.

Later investors supporting returns (in this case both continued financing of the company’s “operations” and share value and/or individual investor stake gains) for earlier investors, including promises of returns: Check. Check. Check.

Intentionality in the structure and outcomes of the scheme: CHECK.

Unsustainable nature of the scheme: Cheeeeeeck.

DJT is simply nothing like Apple, Amazon, Microsoft, or any other legitimate publicly traded business entity. To suggest they are the same or similar implies a gross misunderstanding of the situation and the various events, controversies, and investigations related to DWAC and DJT. Just because it does not exactly resemble the Madoff Ponzi scheme does not mean it is not one. I would suggest looking up the history of the Securities Exchange Company.

I have many decades of experience in financial analytics and fraud detection/prevention, so this is a point I will debate from a position of expertise to the end of time.

By the way, Truth Social never had an IPO. Neither did Trump Media and Technology Group (DJT) which owns it. DJT was created via SPAC merger DWAC, which itself is a dubious process used to avoid regulatory and market scrutiny to take a company public and has been used to carry out many financial scams over the last few years.

 

[SkyBlueFlux]

See above — the SEC is actually investigating claims of both DWAC and DJT operating in bad faith (both in business and stock market actions), and several members of the current and former ownership groups have been charged and/or are under investigation.

I actually wasn’t aware of that but it doesn’t at all surprise me.

 

[SebastianBlue]

I actually wasn’t aware of that but it doesn’t at all surprise me.

It’s been pretty widely known within the investment world for some time that the entire enterprise is an elaborate pyramid scam (with likely ties to Russia and confirmed connections to wealthy far-right entities in the US) and the SEC began investigating TMTG and Truth Social essentially since it came in to existence. They have charged several former executives and shareholders with insider trading, fraud, and a few other regulatory violations, and have been investigating Trump himself (and Devin Nunes, the current CEO of TMTG) for fraud and regulatory violations related to the SPAC merger and general operations, with accusations that the company hasn’t properly disclosed origins of funding (some of which may viole both international and US sanctions) and other financial support, and have misrepresented their financial condition via regulatory required reporting and disclosures. This even after the SEC (under pressure) approved the DWAC-TMTG merger to officially take the later public.

That’s not even getting in to the many, many lawsuits DWAC, DJT, and Trump are facing right now.

Why Trump’s Social Media Company Is Awash in Legal Cases

Donald Trump’s newly public social media company is entangled in many legal cases, the bulk of them involving suspected misdeeds by the executives who helped set up the company and merge it with a public entity — and by the former president himself.

www.bloomberg.com

SEC.gov | SEC Charges Former DWAC Board Member and Others for Insider Trading in DWAC Securities

www.sec.gov

SEC.gov | SEC Charges Digital World SPAC for Material Misrepresentations to Investors

www.sec.gov

https://www.washingtonpost.com/technology/2024/02/03/trump-social-dwac-investigation/