Donald Trump passionately defended his social media platform, Truth Social, as its value took a hit this week due to revelations about increasing losses.
The stock value of Trump Media & Technology Group, which includes Truth Social as its main asset, experienced a significant surge upon its debut in the stock market. Initially, the shares reached a high of $78 each under the ticker symbol “DJT”. By the end of the first trading day, the stock closed 16 percent higher at $57.99, resulting in a valuation of $11 billion for the company.
Shares experienced a significant decline of 21% on Monday, concluding the day at $48.66 and resulting in a substantial loss in its overall value. However, there was a slight recovery as shares rose to $48.81 by the time the stock market closed on Wednesday.
In a recent post on Truth Social, Trump expressed his thoughts on the competitors of the platform. He pointed out that the Radical Left Democrats Party and their “disinformation machine” often try to downplay the significance of TRUTH SOCIAL. However, Trump emphasized that these claims are false and that TRUTH SOCIAL is indeed a powerful platform for spreading information.
In a recent regulatory filing to the Securities and Exchange Commission (SEC), it was disclosed that the company, in which Trump holds a majority stake of nearly 60 percent, reported revenues of just over $4.1 million in its last operating year. However, it also incurred costs totaling $58.2 million, resulting in an operating loss of $15.96 million. Trump’s remarks come in light of this financial update.
According to BF Borgers of Colorado, an auditor for the company, the losses have cast serious doubt on its ability to continue operating.
Despite the filings, Trump confidently asserted that the company possessed a staggering $200,000,000 in cash and had managed to maintain a debt-free status. He further emphasized that these financial figures were particularly impressive for a company that was still in its early stages and experiencing rapid growth.
In his continued defense of Truth Social, he expressed his enthusiasm, stating, “I find Truth to be absolutely amazing! Not only is it financially stable, with over $200,000,000 in cash and no debt, but it also serves as my primary platform to share my thoughts. Whether it is for better or worse, it appears that people are genuinely interested in hearing what I have to say, possibly more so than anyone else in the world, as experts suggest.”
In his statement, he emphasized, “Using TRUTH, I achieved the remarkable feat of becoming the Republican Nominee for President of the United States, and I did it in record time! Whenever I endorse a politician on TRUTH, they consistently emerge victorious. I wouldn’t continue to utilize it if it didn’t produce results or effectively spread the message. However, it does work, and it works exceptionally well. And this is just the beginning of the excitement!”
Truth Social was launched in February 2022, approximately a year after Trump faced bans from X (formerly Twitter) and Facebook due to his posts regarding the Capitol riots. While he has been reinstated on these platforms, Trump has chosen to utilize his own platform, which currently boasts around 500,000 active users across iOS and Android platforms.
According to Todd Landman, professor of political science in the School of Politics and International Relations at the University of Nottingham in the U.K., Truth Social will need to attract a larger user base in order to achieve success.
“The highly anticipated public debut of Truth Social generated excitement within the financial markets, as it held the potential to significantly increase Former President Trump’s net worth. The initial valuation of the company created a buzz, leading to a surge in the DJT stock price. However, the trading patterns in the following days showed a mixed trajectory, with an initial boost followed by a subsequent decline. This downward trend was further exacerbated after the company filed its 8-K with the Securities and Exchange Commission.”
According to the filing, the company generated a revenue of slightly over $4 million and incurred costs of $58 million. This has led to speculations that the company falls under the category of a ‘meme stock’, with a significant portion of its shares owned by the former president.
Amazon, which was established in 1994, took seven years before it finally turned a profit in 2001. However, since then, the company has experienced consistent growth, marked by impressive profit margins. Similarly, Facebook, founded in 2004 under the name TheFacebook, also faced a period of financial struggle before achieving profitability. It was only when Facebook expanded its user base and diversified its business model, notably through the introduction of the Market Place and ad space, that the company started generating significant profits.
In order for Truth Social (and the DJT stock) to thrive, it will need to attract a larger number of users while offering a compelling mix of content, features, and services.
According to a statement released on Tuesday, Devin Nunes, CEO of Trump Media & Technology Group, announced that Truth Social is in a strong financial position with no debt and over $200 million in cash reserves. This provides the platform with ample opportunities for growth and improvement.
