Trump Media plunges as Truth Social tells SEC 2023 loss was $58 million

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Former president Donald Trump’s social media firm stated Monday it misplaced greater than $58 million final yr, sending its inventory plunging roughly 25 p.c solely days after a highflying public debut valued it at greater than $8 billion.

Trump Media & Technology Group, which owns Truth Social, stated in a brand new Securities and Exchange Commission submitting Monday that the corporate generated simply over $4 million in income final yr, together with lower than $1 million within the final quarter of 2023.

The nosediving share worth of the corporate — which makes use of the inventory ticker DJT, for Trump’s initials — shaved off 1 / 4 of its market worth in a single day. It additionally slashed the worth of Trump’s 57 p.c possession within the firm by roughly $1 billion, to $3.6 billion.

The new monetary figures throw into stark reduction the hole between Trump Media’s extremely hyped investor-driven valuation on the general public inventory market and the fact of its enterprise efficiency.

It additionally raises questions in regards to the chance that Trump may use the corporate as a monetary lifeline. Trump can not promote his shares or use them as collateral for a mortgage for six months as a result of a provision within the firm’s merger settlement, often known as a lockup.

The firm’s board may vote to waive that requirement however has but to take action, the filings state. Cashing out early may sink the inventory worth additional by flooding the market with shares and undermining investor confidence in Trump’s dedication to the model, monetary analysts stated.

Trump, who invested no cash in Trump Media, was given 78 million shares of the corporate final week and stands to earn tens of thousands and thousands extra over the following three years if the inventory stays above $12 to $17, a submitting reveals.

Trump Media stated in a submitting that it expects to incur extra “operating losses and negative cash flows” as it really works to increase its consumer base however that it expects its development will come from Truth Social’s “overall appeal.”

The firm stated in a submitting that its administration had “substantial doubt” as of the top of final yr that it will have the funds for to pay its money owed as they arrive due. The firm paid almost $40 million in curiosity bills final yr and racked up about $16 million in working losses.

Trump’s firm unlocked almost $300 million in investor funds final week when it finalized a merger take care of Digital World Acquisition, a particular function acquisition firm that helped take Trump Media public.

Trump Media stated in a submitting that it aimed to spend a few of that cash towards “strategic investments” in advertising and marketing, promoting gross sales and different expertise. About $18 million of it was additionally paid towards a SEC settlement introduced final yr.

The firm has declined to share efficiency indicators like these widespread throughout the tech trade, reminiscent of its variety of energetic customers. Focusing on these numbers, the corporate stated, “might not align with the best interests” of Trump Media or its shareholders.

Trump Media, which makes cash via promoting on Truth Social, has struggled to achieve a broad viewers after two years of operation, in keeping with estimates from the net analytics agency Similarweb. On the corporate’s first day of public buying and selling final week, Truth Social’s web site noticed its highest-traffic day of the month, with roughly 277,000 U.S. guests, the estimates present.

That is a small fraction of most on-line platforms: On the identical day, the discussion-board service Reddit noticed greater than 32 million U.S. guests, the estimates present. Reddit, which not too long ago went public and is buying and selling at the same inventory worth as Trump Media, generated $800 million in income final yr, or greater than 200 occasions Trump Media’s 2023 income.

Trump’s firm stated it has begun testing a “state-of-the-art technology that supports video streaming and provides a ‘home’ for canceled content creators,” which it “aims to acquire and incorporate into its product offerings and/or services as soon as practicable.” The firm didn’t reply to a request for remark looking for additional particulars.

The Trump Media board consists of Trump’s son Donald Trump Jr.; Robert E. Lighthizer, Trump’s former commerce consultant; Linda McMahon, his former administrator of the Small Business Administration; and Kash Patel, who served on Trump’s National Security Council and was paid $130,000 by Trump Media final yr via a consulting settlement.

Trump Media’s chief government, the previous Republican congressman Devin Nunes, was given 115,000 shares, a stake value greater than $5 million at present. He and different board members are sure by the identical lockup settlement.

Nunes is paid a $750,000 wage that’s topic to extend to $1 million inside two years, filings present. The firm’s two chief monetary officers, Phillip Juhan and Andrew Northwall, are every paid about $350,000. Nunes, Juhan and Northwall can even every obtain $600,000 “retention bonuses” this month.

Dan Scavino Jr., Trump’s White House social media director and an adviser to his 2024 presidential marketing campaign, was additionally paid $240,000 final yr via a consulting settlement that listed him as an impartial contractor, a submitting reveals. He, too, can be given a $600,000 retention bonus.

This is a creating story. Please verify again for updates.