Trump's Truth Social's IPO gains wiped out after firm discloses $58M loss in 2023

SCIENCE & TECH: Trump’s Truth Social’s IPO gains wiped out after firm discloses $58M loss in 2023

Donald Trump’s social media company gave back all of its gains since its highly-publicized debut last week – after disclosing millions in losses and saying it would struggle to meet its financial liabilities going forward.

Trump Media & Technology Corp., which began trading under the ex-president’s initials “DJT” last Tuesday, lost more than $58 million in 2023 – a result likely to fuel skepticism about its roller-coaster IPO launch that led experts to dub it another “meme stock” like AMC and GameStop.

The Truth Social parent also generated just $4.1 million in revenue over the 12-month period, according to regulatory filings released Monday. That was an improvement on its $1.47 million in sales from 2022. The company’s sales stem from ads displayed on the social media app.

The stock had surged in its March 26 debut to close at nearly $58 a share – hitting almost $80 at one point – on retail buyer enthusiasm, including supporters of Trump, the likely Republican nominee in 2024’s presidential election. 

Trump Media said its success is tied to the former president’s popularity. AP

But Monday’s disclosure reversed that trend, sending shares down $13.30, or 21%, to $48.66.

The stock fell below the $49.95 per share price held by the blank-check company it merged with ahead of its trading debut.

“Truth Social was overvalued and that reality is dragging down the stock. Because the service does not have a clear path to profitability and its revenues are meager, its high debut was unsustainable,” said Ross Benes, analyst at Insider Intelligence.

In its filings, the company admitted that its success “depends in part on the popularity of our brand and the reputation and popularity of President Trump.”

“The value of TMTG’s brand may diminish if the popularity of President Trump were to suffer,” one filing said. “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.”

Truth Social
Truth Social generated just $4.1 million in revenue last year. FellowNeko –

Last week, experts told The Post that Trump’s company was “untethered from fundamentals” and trading much higher than its performance would suggest — raising the risk for retail investors who put their hard-earned money into the stock.

Despite its weak sales and small user base, Trump’s company is currently worth nearly $6.6 billion – a shocking figure that pushed Trump presumptive 2024 Republican presidential nominee into the top 500 on the Bloomberg Billionaires Index.

Trump’s 57% stake in the Truth Social parent is currently worth $3.76 billion, according to Bloomberg.

Truth Social had an estimated base of just 494,000 monthly active users for its mobile app in February, according to data from analytics firm Similarweb. By comparison, Facebook had 142.4 million users, Elon Musk’s X had 75 million users and even little-known Threads had 7.2 million.

Trump Media’s initial success prompted speculation that the former president could seek to dump some of his holdings to pay for his mounting legal bills, such as a $175 million bond payment due this week in connection to his civil fraud case in New York.

For now, the filings showed that a six-month lock-up agreement preventing Trump and other shareholders from selling shares is still in effect. In order to bypass the agreement, the company’s board of directors would have to grant Trump a special waiver.

Axios was first to report on the filings.

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