Trump Media merged with a SPAC in late March at a price around $40 a share. DJT quickly shot above $66 but has been fading since. As I’m writing this, the stock is around $18.50.
The enterprise selected Denver-based accountant BF Borgers to audit its books. Although Denver is a wonderful city and Colorado is a beautiful state (I lived in Manitou Springs for while after college), a Denver-based auditor triggers alarm bells for any professional investor. And, as it turns out, Borgers agreed in May to a permanent ban from the auditing business, after being charged by the SEC with “massive fraud affecting more than 1500 SEC filings.” Yes, a new auditor is in place. But experience tells me that it’s best to regard the as yet unaudited financials of DJT as more of an aspirational goal than a conservative view of company operations.
Two things jump out at me from the latest 10-Q:
–book value, which is a rough-and-ready calculation of what shareholders might expect to receive if the company were liquidated today, is less than $2 a share, and
–DJT is losing money–$16 million+ in the June quarter. This often happens with startups. However, a company that is making losses today will usually subtract from the number reported to shareholders the benefit it figures it will ultimately get from using today’s losses to shelter future income from tax. Not here, though–meaning that whoever is drawing up the financials doesn’t care to assert there will be future profits to use.