The stock market price of the publishing company of the Truth Social network defied logic. With Donald Trump as the main shareholder and with his initials (DJT) as a stock code, the firm Trump Media & Technology Group (TMTG) had skyrocketed on the stock market to reach a valuation of more than $8 billion. This Monday, the company acknowledged that it closed 2023 with hardly any income and multimillion-dollar losses and the shares have plummeted, erasing part of Trump’s theoretical wealth at a stroke.
The company is the result of the merger of an investment vehicle called Digital World Acquisition Company (DWAC) and TMTG itself prior to the merger. The company has communicated to the United States Securities and Exchange Commission (the SEC) the 2023 accounts of both companies separately, as well as the joint result if they have already been merged. In all cases, the results give a ruinous image of the business.
TMTG, owner of Truth Social, had revenue of $4.1 million throughout 2023. That is less than what Twitter made in one morning (before Elon Musk bought it and advertisers fled). . Trump’s company had losses of $58.2 million, partly weighed down by the interest burden on his debt. For its part, DWAC was a Spac, a type of non-active company with a bearer check that seeks the purchase or merger with another company. Since it had no activity, it also had no income and its losses were 21.9 million.
When the so-called pro forma accounts are made, that is, as if the two companies (TMTG and DWAC) had already been merged in 2023, the result is even worse. The company’s turnover remains at the aforementioned 4.1 million dollars, the operating result is negative for an amount of 152 million dollars and the net losses amount to 100.7 million dollars, according to the accounts that are still unaudited.
The market has taken note of the harsh reality of the business figures compared to the self-absorption of the stock market price in recent days. The price has fallen by 27% and at closing it was down 21.5%. Even so, its value remains shocking for a company that does not expect to make profits or distribute dividends in the foreseeable future. TMTG’s market capitalization, even after Monday’s collapse, remains at $6.7 billion, similar, for example, to that of The New York Times Company, which achieved revenues of $2.426 million and a profit in 2023. of 232 million.
Trump is by far the largest shareholder, with approximately 58% of the capital. He owns 78.75 million TMTG shares. With this Monday’s fall, the former president’s fortune has been reduced by about $1.05 billion. Even so, his shares continue to trade at about $47 per share and are, therefore, valued at about $3.8 billion. Combining this share package with his and other real estate holdings outside of TMTG, the former president’s fortune exceeds $6 billion and places him among the 500 richest men in the world.
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In addition, the former president has the right to receive another 36 million shares as a prize if certain milestones are met with the listing that they are on track to achieve, so in a matter of weeks, Trump could get those 36 million additional shares, valued at market by another 1.7 billion dollars, after this Monday’s collapse.
No liquidity
The documentation registered this Monday with the supervisor confirms that Trump has a commitment not to sell the shares for a period of six months that began on Tuesday and that can only be skipped in certain exceptions. The council, in the hands of people close to the former president, could authorize him to sell sooner, but the mere announcement could cause a collapse. Trump has enormous wealth on paper in TMTG, but no one knows how much of that wealth he will be able to make effective. Furthermore, the former president lacks liquidity, as has been shown by his difficulties in providing bail in the civil fraud case for which he has been convicted in New York.
Unlike traditional social media companies, which tout metrics like active users or revenue per user, Trump Media “believes that sticking to traditional key performance indicators” could “divert its attention from strategic evaluation regarding progress and growth.” of your business,” according to the IPO brochure. When regulators asked about the number of Truth Social subscriptions and users, the company only revealed the records. The company maintained that it has achieved “an approximate total of 8.9 million registrations on Truth Social across iOS, Android and the web,” although that figure is not equivalent to the number of active users.
He Wall Street Journal, which dedicated an editorial to TMTG’s seemingly absurd valuation, concluded that investors may be betting that Trump will win the election in November and use Truth Social as a mouthpiece for the White House, attracting more users and advertisers to the platform. .