The company behind former President Donald Trump’s social media platform, Truth Social, stated in a regulatory filing on April 1 that it suffered a net loss of more than $58 million, and the news sent its stock down by more than 20 percent.
The new filing with the Securities and Exchange Commission (SEC) shows that Trump Media and Technology Group (TMTG), which trades under the stock ticker DJT, brought in about $4.1 million in revenue in 2023 while experiencing a net loss of $58.2 million.
Much of the loss appears to be related to an interest expense of $39.4 million on its outstanding debt, according to the filing. In 2022, the company made a net profit of $50.5 million.
More Details
The company noted that it’s looking to enhance the platform’s appeal by new initiatives such as acquiring new technologies. It stated that it has already started testing “a particular, state-of-the-art technology that supports video streaming and provides a ‘home’ for cancelled content creators” that TMTG aims to acquire and incorporate into its offering as soon as possible.“Such initiatives and potential acquisitions are still preliminary and subject to material changes and risks, some of which are beyond TMTG’s control,” the company stated.
“Given these uncertainties, TMTG believes it is premature for TMTG to predict when it will attain profitability and positive cash flows from its operations.”
TMTG noted that its success depends in part on the popularity of its brand and the reputation of President Trump.
The stock price of Trump Media fell sharply in morning trading after the company disclosed the new filing, with shares at about 24 percent at the time of reporting.
The newly combined company debuted last week and began trading under the DJT ticker, with its stock surging to more than $70 per share, sending its market cap to more than $7 billion.
Following news of the SEC filing, shares of TMTG were down at about $45.70 as of 1 p.m. EDT on April 1, putting the company’s market capitalization at roughly $6 billion.
Supporting Trump
President Trump owns a 57 percent stake in the company, which is worth roughly $3.5 billion at a stock price of about $45 per share.Although the debut of the ex-president’s media company boosted his net worth sharply, he can’t sell his stake immediately because of a six-month lockup agreement.
All shareholders of TMTG, including the former president (unless he receives a waiver from the company’s board stacked with family members and allies) are subject to a lockup period during which they are prohibited from selling shares. This is to prevent major shareholders from cashing out immediately after merging, which would lead the stock price to crash.
Shareholders are also prohibited from offering shares as collateral to raise loans during the lockup period.
TMTG is currently seen as a meme stock, meaning one with viral popularity because of the high social sentiment attached to it.
“All the things that people use to value a company become somewhat irrelevant” Steve Sosnick, chief strategist at Interactive Brokers, told The Hill regarding meme stocks. “It’s about being part of something bigger.”
According to TMTG, the commencement of DJT’s trading on public markets is a testimony to the American demand for free speech online, rejecting the “stifling censorship” imposed by big tech firms.
“We built this company to protect the American people’s voices and their freedom,” TMTG CEO Devin Nunes said. “Having transformed into a public company, Truth Social remains committed to maintaining and vehemently defending a digital space for free expression.”
