Former President Donald Trump has emphasized the strong fundamentals and bright future of the company behind Truth Social amidst market fluctuations. Trump stated that the media’s focus on the $58 million loss of the company is misplaced, highlighting its solid foundation of over $200 million in cash and zero debt. Official financial data for the first quarter of Trump Media & Technology Group, the parent company of Truth Social, is not yet available.
After a successful merger with Digital World Acquisition Corp., Trump Media went public, leading to a surge in market interest and an initial stock price of over $79 per share. However, news of a $58 million loss in 2023 caused a 20% drop in share prices, which stabilized around $45 with a market cap of $6.3 billion. Despite the loss, the company reported a net profit of $50.5 million in 2022.
Trump Media received a $300 million cash infusion from the merger and generated $4.1 million in revenue last year. Executives anticipate ongoing losses as they aim to expand Truth Social aggressively and attract more users and advertisers. Trump’s stake in the company is now valued at approximately $3.8 billion.
The company is currently the most shorted special purpose acquisition vehicle in the country, indicating investor skepticism about its future performance. Trump Media executives are exploring new initiatives, such as acquiring new technologies and testing video streaming capabilities, to enhance the platform’s appeal. However, they acknowledge that profitability and positive cash flows are uncertain at this time.
The success of Truth Social is tied to the popularity of its brand and the reputation of President Trump. Executives recognize that any decline in Trump’s popularity could impact the value of the company’s brand.
Adverse reactions to publicity relating to President Trump, or the loss of his services, could adversely affect TMTG’s revenues, results of operations and its ability to maintain or generate a consumer base.
It’s a message the former commander-in-chief appears to have taken to heart, with his posts on Thursday touting the impact of the Truth Social platform and blasting its detractors.
“All of the competitors to TRUTH SOCIAL, especially those in the Radical Left Democrats Party who are failing at every level, like to use their vaunted ‘disinformation machine’ to try and convince people, and it is not easy to do, that TRUTH is not such a big deal and doesn’t ‘get the word out’ as well as various others, which they know to be false,” President Trump wrote in one of his posts.
“It is the primary way I get the word out and, for better or worse, people want to hear what I have to say, perhaps, according to experts, more than anyone else in the World,” he wrote, adding that competing social media platforms, which he said canceled him for largely political reasons, would love to have him back.
“Look, using TRUTH, I became the Republican Nominee for President of the United States, and in record time! When I ENDORSE a politician on TRUTH, they almost ALWAYS WIN,” he continued, adding that if the platform didn’t work to get the message out, he wouldn’t use it.
Meanwhile, as President Trump paints the fate of Truth Social in bright colors, there appears to be no shortage of investors willing to bet on its demise.
“They are looking for this stock to crater and crater very quickly,” Ihor Dusaniwsky, managing director of predictive analytics at S3, told The New York Times of the big interest in shorting Trump Media.
