Truth Social is a public company: How much money has it lost since Trump launched the social media platform?
The Trump-owned social media company made major gains after going public this week. However, its financial situation has it looking like a meme stock.
A little over a year after Donald Trump’s social media accounts were blocked on Twitter, Facebook and YouTube, among others, he launched his own platform, Truth Social. He was temporarily barred from mainstream social media after the infamous events of January 6, 2021, when his supporters assaulted the US Capitol to stop the peaceful transition of power following a rally in front of the White House in which the outgoing president whipped the crowd into a frenzy.
Since its debut in February 2022, first on Apple’s app store and then eight months later on Google’s Play Store, Truth Social has failed to gain much traction in the market. Despite this, after several setbacks, a merger was approved between Trump Media & Technology Group (TMTG), the parent company of Trump’s social media app, and Digital World Acquisition Corp (DWAC).
The latter is a special purpose acquisition company whose sole purpose is to raise money from investors for the acquisition of an operating business to then take it public. Trump’s technology company began trading this week on the Nasdaq Composite under the new ticker ‘DJT’.
Despite the company’s weak numbers, both in revenue and users, in its first day of trading, it has made major gains. The mismatch between its financial reality and its market valuation, in the range of $8 billion at the end of trading Wednesday, have led to comparisons with meme stocks such as GameStop and AMC.
Truth Social is a public company: How much money has it lost since Trump launched the social media platform?
The merger with DWAC will give the company a much needed cash injection of $300 million into Truth Social’s parent company. So far, the only product that TMTG appears to have up and running is the social media platform. The company has plans to start a subscription streaming service as well as a technology arm.
Currently, Truth Social has around 8.9 million sign-ups as of February, of which 6.7 million follow the former president. But Axios reports that in February 2024 the website had only 5 million monthly visits globally according to SimilarWeb estimates. The web analytics company as well says that the app only has about 1 million daily users in the US.
The site is making vast majority of its revenue through advertisement, but the numbers are pretty meek, especially compared to other social media platforms. Truth Social pulled in $3.4 million in revenue during the first nine months of 2023. The red column of the ledger though was $49 million.
That means that its early valuation is roughly 2,000 times its estimated annual revenue. The boost to its market trading has come from retail investors, like those that took GameStop and AMC shares for a rollercoaster ride in 2021 but those are now just trading at a fraction of their peaks.
Whether it can show strong profit margins and high-growth potential that would attract institutional investors has yet to be seen. Trump’s technology company has yet to outline its latest business strategy and product plans for investors to analyze despite hyping its other products that are supposed to be forthcoming.
While it is common for for tech companies to operate at a loss for several years and take time to make a profit, if ever, eventually investors will want to see something to maintain its extraordinary valuation.
An additional problem the company’s stock price could be facing is if Trump tries to cash out on the billions that he would get, and could need to face his legal problems. However, he cannot sell nor borrow off his majority stake for up to six months from the time the company goes public.