Trump’s Social Media Company Shares Plummet by 20%
In a dramatic turn of events, Donald Trump’s social media company saw its shares drop by more than 20% on Monday, just days after making its debut under the DJT ticker.
The plunge was a result of Trump Media & Technology Group reporting a staggering loss of nearly $60m (£48m) in the last year, with only $4m in revenue to show for it.
This significant price drop caused the former president’s net worth to decrease by $1bn, according to Bloomberg.
Initially, shares had soared, giving the company a valuation of $11bn. However, experts had predicted a downfall as the company’s main product, Truth Social, struggled to retain users and generate income.
Comparisons were drawn to the meme stock frenzy during the pandemic era, where companies like GameStop and AMC saw their share prices skyrocket despite weak fundamentals.
Trump Media, relying solely on advertising revenue from Truth Social, witnessed its shares plummet by $13.30 to $48.66 on Monday, though they are still up nearly 200% for the year.
The surge in share prices has been driven by small investors showing support for the former president amidst his ongoing legal battles and financial woes.
While Trump holds a majority stake in the company, he is legally prohibited from cashing out his shares for another six months unless a waiver is granted by the board.
Despite the optimism, a special filing to the Securities and Exchange Commission (SEC) revealed that Trump Media expects to continue incurring operating losses and negative cash flows in the foreseeable future.
The company disclosed paying $40m in interest expenses and $16m in operating losses in 2023, casting doubt on its ability to meet liabilities as they arise.
Truth Social, launched in February 2022 following Trump’s ban from major social media platforms, has struggled to attract a substantial user base, with only an estimated five million active monthly users according to Similarweb.
With approximately 8.9 million sign-ups, Truth Social has refrained from sharing key performance metrics, leaving shareholders in the dark about its operations. – BBC
