- Written by Sam Cabral
- BBC News, Washington
image source, Getty Images
Trump Media only makes money from advertising on Truth Social
Shares of Donald Trump’s social media company fell more than 20% on Monday, less than a week after it began public trading under the DJT ticker.
The decline comes after Trump Media & Technology Group reported losses of nearly $60m (about £48m) last year, despite only earning about $4m in revenue. Ta.
According to Bloomberg, the former president’s net worth decreased by $1 billion due to the plunge in prices.
Shares soared last week, valuing the company at $11 billion.
But experts warned that the stock price is bound to fall as the company’s flagship product, Truth Social, loses users and loses cash.
The price surge has drawn comparisons to the pandemic-era “meme stock” mania. At the time, the stock prices of companies like GameStop and AMC soared even though fundamental aspects of their businesses, such as profits, were stagnant.
Meme stocks are stocks that suddenly become popular on social media, causing prices to rise as online investors rush to buy them.
On Monday, shares of Trump Media, which makes money solely from advertising on Truth Social, fell $13.30 to $48.66. But so far this year, it’s still up nearly 200%.
The surge is being driven by small investors, at least some of whom appear to be showing support for the former president amid mounting legal issues and accompanying bills.
Mr. Trump owns nearly 60% of the company, and cashing out his shares would provide him with a multibillion-dollar windfall, unless the company’s board grants him a waiver, for another six months. are legally prohibited from converting into cash.
But these investors are betting on the following companies in a special filing Monday: told the Securities and Exchange Commission (SEC). The company said, “We expect operating losses and negative cash flows from operating activities to continue for the time being.”
Trump Media paid about $40 million in interest expenses and about $16 million in operating losses in 2023, according to financial reports.
The company said management has “significant doubts” that it has “sufficient funds to repay debt as it falls due.”
Truth Social launched in February 2022, about a year after the former president was banned from Twitter (now X) and Facebook in the aftermath of the violent insurrection at the U.S. Capitol.
Trump’s accounts on both platforms have since been reinstated, but he continues to use Truth Social as his primary means of social media posting.
However, his presence on the platform has not helped him gain a wide audience. According to Samelweb estimates, the company has around 5 million monthly active users, which is much lower than its competitors.
Truth Social claims to have around 8.9 million sign-ups, but refuses to share publicly disclosed performance metrics to give shareholders a better understanding of what the company does. There is.
