Its losses would also have been about $US5.5 million higher, had it not carved into its administration and development costs. Conventionally, an immature start-up – Trump Media launched two years ago – wouldn’t be cutting its research and development spending by $US3.9 million, or nearly 30 per cent, at this stage of its existence.

The extreme response to the release of the accounts highlights how volatile trading in Trump Media shares is and probably will be in future. Its base of Trump loyalists is unlikely to care whether it ever makes a profit, but less bonded-on investors are likely to be more flighty. The stock also has heavy short positions.

Even after the sharp sell-off, it remains impossible to rationalise Trump Media’s valuation using any conventional analysis.

Its only real assets are $US273 million of cash, largely delivered by the merger and which have given it $US218.2 million of shareholder equity and Donald Trump’s personal brand.

That’s a brand associated with courtroom findings of sexual abuse, defamation and corporate fraud and which is also threatened by a range of even more serious charges relating to the attempt to overturn the result of the last US election and those relating to the top secret documents kept at Mar-a-Largo. Trump is, of course, a near even-money chance to regain the US presidency, so the brand is resilient.

Trump Media has a tiny user base. Since launch, about 9 million users have signed up but there are only about 5 million monthly users.

Another social media platform, Reddit, also listed last month. It has about 73 million daily active users and more than $US800 million of revenue. It’s valued at a still-staggering 930 times revenue but that looks almost conservative when set against Trump Media’s multiples.

What should be most disconcerting for Trump Media shareholders is that its entire business strategy was predicated on there being a market for a non-liberal social media platform.

It was founded, its management says, to “fight back against the big tech companies” that it believes “collude to curtail debate in America and censor voices that contradict their woke ideology”.

Unhappily for Trump Media’s ambitions, Elon Musk acquired Twitter, subsequently rebadging it as X, reopening the platform to those previously banned from it and allowing users to – as Trump Media puts it – “freely express themselves”.

While that pivot towards the right hasn’t proven to be commercially successful – X’s advertising revenues have been gutted and Musk and his backers have probably halved the value of their equity – the platform has occupied the market space that Trump Media is targeting. Musk says X has more than 550 million active monthly users worldwide.

Maybe Trump Media can build a niche business catering for hardcore Trump supporters, and maybe its shares can act as a way for those supporters to demonstrate their loyalty to him, or to bet on the odds of his re-election, or to simply speculate or, as has occurred with meme stocks previously, to give a two-fingered salute to the Wall Street establishment.

None of those attributes, however, would rationalise anything remotely close to even the diminished Trump Media valuation or provide pathways to profitability.

The experience of other once high-flying meme stocks might be salutary.

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In 2021, a bizarre phenomenon emerged from Reddit chat rooms when retail investors decided to take on short sellers in Gamestop and AMC Entertainment. Gamestop shares soared from $US4.71 to more than $US81 in January 2021 while AMC shares rocketed from $US58 to more than $US360 between early May and mid-June that year.

There was no logic to what occurred except, perhaps, a bit of a distraction for bored retail investors during the pandemic as they played out a version of the populist Occupy Wall Street protest movement against inequality and corporate greed.

The phenomenon was short-lived. Gamestop shares now trade around $US12 and AMC shares just over $US3.

The retail fever around Trump Media has been likened to those events and also to the near-religious relationship some retail investors have with cryptocurrencies, which have no cash flows or underlying assets and which, with some very minor exceptions, aren’t mediums of exchange.

Effectively, capitalising Donald Trump’s brand at most of Trump Media’s $US6.6 billion of market value (it was more than $US8 billion) is as logic-defying as putting a $US30 billion value on Dogecoin, the cryptocurrency coined as a joke, but it is hard to see where else the value in Trump Media lies.

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