Donald Trump’s newly announced social media firm is not the next Nvidia, Meta, Google, or whatever happened to X/Twitter.
The stock price of Trump Media and Technology Group, which trades under the ticker DJT (because, of course, it does), soared following the conclusion of its SPAC merger last week. A SPAC, or special-purpose acquisition company, is a shell company, such as Digital World Acquisition, that goes public with the objective of eventually purchasing a legitimate corporation. For a moment, TMTG’s market capitalization was around $9 billion, making it more valuable than Etsy and Hasbro. That increased the former president’s net worth to $7 billion, but not in a way that he can immediately benefit from. Trump is not permitted to sell his shares for six months unless the company’s board of directors decides otherwise.
If I were Trump, however, I would lobby the board to shorten the lockup time so that I could cash in. It is doubtful that his media company’s stock price will remain this high indefinitely. (Investors appear to agree, as the stock fell more than 25% on Monday, following the publication of this report.)
For starters, TMTG, which owns the conservative Twitter imitation Truth Social, produces virtually nothing. A fresh financial report on Monday revealed that the company’s total revenue for 2023 was $4.1 million. Extrapolate that out, and the stock is trading at around 2,000 times the company’s yearly sales. That is, uh, high. Apple, for example, is trading at around seven times its total revenue. And, considering its low sales, TMTG actually lost $58 million last year.
Trump’s company says it has bigger plans ahead, including expanding Truth Social and developing “one or more additional cutting-edge products and/or services” to complement Truth, such as a video-streaming platform that “provides a ‘home’ for cancelled content creators.” It’s unclear what this would look like or how many people would attend.
According to third-party trackers, Truth Social received an estimated 5 million monthly website views in February of this year, but the company is not disclosing specific stats at this time. For instance, when Facebook went public in 2012, it had 845 million monthly active users, while Twitter had 215 million the next year. The long and short of it is that TMTG is not a successful business, both long and short.
However, other social media platforms that aim to reach a broad audience may not be the most comparable. Truth Social, as well as any other ventures launched by Trump Media and Technology Group, are very certain to cater only to Trump supporters.
Trump’s media venture isn’t the only conservative organization to go public through SPACs in recent years, hoping to profit from right-leaning consumers and investors. Its predecessors haven’t done so well. Rumble, a Peter Thiel-backed YouTube channel on the right, increased by over 40% on its first day of trading in September 2022 and has been significantly below that level ever since. Both Black Rifle Coffee, a Republican Starbucks, and Public Square, the GOP’s alleged alternative to Amazon, have followed similar paths: an initial stock surge, followed by a steady decline to below $10. None of them have established long-term profitability, though Black Rifle claims to be on track.
I’d guess Trump has much better odds of winning the White House (or ending up with some criminal convictions) than he does seeing his mediocre social-media company take off.
Anti-wokeness is not a particularly lucrative industry. People often declare they wish to shop and invest in their ideals, yet this rarely happens. Instead, most people choose the most comfortable alternative and what they are already used to doing. Most boycotts fail because people are too busy and fatigued. This is also true on the left. If you dig deep enough, every firm in the world will most likely give you a reason not to give them your money.
Might Trump and Truth Social differ, at least in terms of stock? I suppose everything is possible. As my colleague Peter Kafka points out, investors aren’t shorting the company in large numbers just yet, due to the difficulty of doing so and the fact that DJT is taking off with the meme-stock crowd. GameStop and AMC weren’t doing particularly well financially when they became memes, but small-time investors were willing to rush into them. For a sizable portion of the population, putting money into Trump’s company is not only a means to stick it to The Man, but also to The Woke Man. Trump has also spent years claiming that his literal name is worth a lot of money, and we’re going to find out how much.
Still, I believe Trump has a much higher chance of winning the presidency (or perhaps some criminal charges) than of seeing his poor social media firm succeed. He may contact someone on TMTG’s board, such as his son Don Jr., and request that they schedule a meeting so that he can begin dumping shares sooner rather than later.
