Trump’s Truth Social stock tanks after new SEC filings reveal company lost $58m in 2023

Trump’s Truth Social stock tanks after new SEC filings reveal company lost $58m in 2023

After a blockbuster debut on the Nasdaq last week, the share price of Donald Trump’s media and technology group plummeted in trading on Monday after post-merger financial statements revealed new details of the company’s business.

Trump Media & Technology Group, the parent company of social media platform Truth Social, was down as much as 27 per cent in value by lunchtime, having opened at $61.92.

A regulatory filing with the Securities & Exchange Commission early on Monday morning showed the company had only achieved revenue of $4.1m in 2023, with net losses reaching $58.2m.

In 2022, the company said it made a profit of $50.5m.

Since the merger with Digital World Acquisition Corp, Trump Media began trading on the Nasdaq under the ticker symbol DJT on Tuesday, reaching a high of $79/share by Thursday.

The share price bottomed out at around the $47 mark before staging a slight recovery closing at $48.66, down 21.47 per cent for the day. According to one calculation that lowers the value of Mr Trump’s stake in the company by $1bn.

Industry analysts have compared the fervour around Trump Media to the meme stock craze, which notably boosted shares of struggling companies such as GameStop and the movie chain AMC Entertainment to exorbitant heights in 2021.

On Monday, shares for these so-called meme stocks slid as well, with GameStop and AMC down more than 7 per cent and 11 per cent, respectively. And Reddit, another company that recently went public and looped into meme stock frenzy comparisons, slumped more than 6 per cent.

Research firm Similarweb estimates that Truth Social had roughly 5 million monthly visits in February of this year. By comparison, Facebook had 15.2 billion visits, while Reddit had 2 billion.

“TMTG may be subject to greater risks than typical social media platforms because of the focus of its offerings and the involvement of President Trump,” the company said in the filing, citing risks that include the harassment of advertisers and criticism of Truth Social’s moderation practices.

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

Further, the company warns: "If we experience a decline in the number of users or a decline in user engagement, including as a result of the loss of high-profile individuals and entities who generate content on Truth Social, advertisers may not view Truth Social as attractive for their marketing expenditures, and may reduce their spending with us, which would harm our business and operating results.”

The filing also confirmed that stakeholders, including the former president, are still subject to a six-month lockup period before they can sell or transfer shares.

That stipulation – commonly used to prevent newly public entities from signalling internal collapse or a lack of faith in the company’s future – applies to Mr Trump who otherwise stands to make billions if the value of the company can be held up.

The former president set up Truth Social after being banned from Facebook and Twitter in the aftermath of the January 6 Capitol riot in 2021.

With additional reporting from agencies