Prof G Markets: Trump’s Memestock Goes Public, the Problem with DEI, and Daniel Kahneman’s Legacy

Volatility

The initial public offering of Truth Social has been marked by extreme volatility, with shares experiencing significant swings. Scott Galloway highlights the absurdity of its valuation, noting that it trades at 1500 times annualized sales, a stark contrast to other tech giants like Nvidia and Reddit 1. He advises caution, suggesting that the stock's volatility could lead to substantial losses for investors 2.

I wouldn't get near this thing right now because it has no basis in gravity or reality.

Ed Mylett adds that Truth Social's active user base is significantly smaller than other platforms, further emphasizing the risks involved 1.

   

Governance

The governance of Truth Social raises significant ethical concerns, particularly regarding potential manipulations by Donald Trump and his associates. Scott Galloway criticizes the board's composition, likening it to a model of poor corporate governance 2. He warns that Trump's ability to influence the board could lead to questionable decisions that prioritize personal gain over fiduciary responsibility 3.

This board makes the Tesla board look like a model of good corporate governance.

Ed Mylett points out that the largest institutional investor in Truth Social has close ties to Trump, further complicating the ethical landscape 3.

   

Manipulations

Potential financial maneuvers by Donald Trump to extract money from Truth Social are under scrutiny. Ed Mylett explains that Trump faces a significant financial burden due to a civil fraud case, making the stock a potential lifeline 4. He suggests that Trump might attempt to announce a dividend to access cash, a move that could be seen as a major financial manipulation 4.

It would be one of the greatest grifts ever.

Scott Galloway warns that such actions could lead to shareholder lawsuits, given the company's precarious financial state 2.