DJT Goes All-in on Bitcoin. A Look at Truth Social Parent's $2.5 Billion Bet. — Barrons.com

By Nate WolfBitcoin is hovering near its all-time high, and Trump Media & Technology Group wants in on the action — even if it means using a page from the MicroStrategy playbook.The Truth Social parent company, which trades under the ticker DJT, announced plans Tuesday to raise $2.5 billion to purchase Bitcoin as part of a new corporate treasury strategy. The move will dilute current investors' holdings, meaning President Donald Trump will no longer hold a majority stake in the business."We view Bitcoin as an apex instrument of financial freedom," said CEO Devin Nunes in a statement. "Now Trump Media will hold cryptocurrency as a crucial part of our assets.""Crucial" may be an understatement. Trump Media reported holding $759 million in cash, cash equivalents, and short-term investments at the end of the first quarter — just a fraction of the Bitcoin the company now plans to add to its balance sheet.Trump Media isn't alone in making the pivot to bitcoin. A growing contingent of small listed companies have moved to transform themselves from standard operating businesses to crypto treasuries in a bid to boost their share prices, taking the strategy made famous by MicroStrategy and its CEO Michael Saylor.The question now is whether attaching Trump's name to this crypto acquisition strategy will give the company an advantage over the others using the MicroStrategy strategy.The president and his allies have embraced digital currency like few others in American politics. They have made it a central part of Trump's 2024 campaign and his second term in office by promising to deregulate crypto markets and establish a strategic crypto reserve.Speakers at this week's Bitcoin 2025 conference in Las Vegas include Vice President JD Vance, Trump's sons Donald Jr. and Eric, White House crypto czar David Sacks, and digital asset advisor Bo Hines, along with a handful of Republican senators and representatives.Trump Media's Bitcoin deal appears at least somewhat related to the American right's growing interest in digital assets."This investment will help defend our Company against harassment and discrimination by financial institutions, which plague many Americans and U.S. firms," Nunes said.Companies wouldn't be making these moves without MicroStrategy's example. Since 2021, MicroStrategy, which does business as Strategy, has transformed from a mid-cap enterprise software firm into the world's largest corporate holder of Bitcoin, selling debt, equity, and stock to fund crypto purchases. The company now owns 580,250 bitcoin, purchased for a total of $40.6 billion, according to a May 27 filing with the Securities and Exchange Commission, or just under $70,000 a coin.And while the software business is still operational, MicroStrategy stock has essentially become a leveraged play on Bitcoin, giving both retail and institutional investors exposure to the asset.The upside — and volatility — are undeniable. MicroStrategy shares have soared nearly 1,600% over the past three years and 123% over the last 12 months.As J.A. Maartuun of CryptoQuant put it, "the MicroStrategy stock is like Bitcoin on steroids."With a market value of nearly $102 billion, MicroStrategy trades at a premium compared with the amount of Bitcoin it actually holds. In-the-know investors call this markup the "net asset value multiple," or "NAV multiple," and companies like Trump Media are now chasing after it for themselves.Beginning last year, the Japanese company Metaplanet went on a Bitcoin shopping spree, transitioning from a hotel company into one of the world's largest corporate crypto holders. On Wednesday, GameStop announced that it had snapped up 4,710 Bitcoin for an estimated $5.1 billion as it attempts to build a crypto treasury.In other cases, crypto evangelists have acquired or merged with existing microcap companies with no previous crypto operations, giving them publicly listed vehicles to run versions of the MicroStrategy playbook.In April, alumni from the crypto exchange Kraken took a majority stake in the struggling real estate technology company Janover to pursue a similar strategy to MicroStrategy's except using Solana instead of bitcoin. With the stock languishing at less than $1 a share, then-CEO Blake Janover, who still serves as chief commercial officer, told Barron's he felt a responsibility to shareholders to make the deal.The company, renamed DeFi Development Corp., has amassed the largest Solana holding of any listed company and has seen its stock price climb 3,456% so far in 2025.Kindly MD, up 1,906% this year, has had a similar rise. The tiny Utah-based holistic medicine company merged earlier this month with Nakamoto Holdings, a crypto fund led by Trump campaign crypto advisor David Bailey. Nakamoto raised $710 million through private investments and convertible bonds to fund the deal, which Bailey described as a no-brainer in a series of posts on X.Trump Media stock, which has lost more than half its value over the last 12 months, hasn't seen an immediate boost from its crypto move. Shares fell 11% on Tuesday after the company announced the Bitcoin acquisition strategy, and were falling again Wednesday. Trump Media investors will have time to assess the strategy as the company stockpiles more and more Bitcoin.The company didn't respond to requests for comment.Christian Lopez of Cohen & Company Capital Markets, who helped secure investors for both the Trump Media and Kindly MD deals, believes there's only room for a handful of companies to scale like MicroStrategy and chase the NAV multiple. Trump Media is part of that chase, he says."MicroStrategy has already won. They're number one and they're going to stay number one. Now, people are competing for slots two through five," Lopez says. "It's an arms race."After the $2.5 billion capital raise, Trump Media's financial muscle is clear. To date, stocks and cryptocurrencies tied to Trump have a mixed record.In January, the president and first lady Melania Trump launched their meme coin tokens, which first spiked and then plummeted in value. Shares of conservative media company Newsmax, which has a friendly relationship with Trump, have tumbled after an initial post-IPO surge in March.Trump Media's top executives also have limited expertise in digital assets compared with some of their peers. Nunes, the CEO, is a longtime U.S. congressman, while chief financial officer Phillip Juhan last served as the finance boss at now-delisted fitness operator Town Sports International.In an interview before the Trump Media deal was announced, DeFi chief operating officer Parker White argued that his team's background in crypto and prominence within that ecosystem have earned them a level of trust among investors.There's also the not-so-trivial question of whether this strategy works. MicroStrategy has enjoyed an enviable four-year run, buoyed by the rise in Bitcoin and some smart corporate finance moves, said Dave Palmer of Benchmark Capital. "Strategy has been very careful not to add too much leverage," Palmer told Barron's. "They're very aware of what could happen if there was a significant decline in the price of Bitcoin ."But not every company may be so prudent, and there's no guarantee Bitcoin, or other digital currencies, will continue to appreciate in the way advocates of crypto treasury programs believe."There's going to be volatility when the price draws down, and it will," said Lopez. "But if it draws down, that's just another opportunity to buy more Bitcoin at a lower price."Write to Nate Wolf at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.