Trump Media SPAC Plummets After Reporting Big Losses, Highlighting Risks of Celebrity-Backed Deals
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Trump Media went public via a SPAC, saw early stock price rises, but recently reported big losses, showing the weakness of betting on IPOs or SPACs.
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SPACs are shell companies created to acquire other companies and take them public quickly, but often have little financial data to analyze.
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Many SPACs are desperate to make acquisitions, even of very small or weak companies, just to meet deadlines.
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IPOs let insiders and banks make big profits by hyping demand, while regular investors buy at inflated prices and take losses.
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Trump Media stock spiked early but dropped hard after reporting a $58 million loss, harming investors lured by Trump's name who hoped for easy profits.