You’ve probably heard that Donald Trump is facing a cash crunch. As our Andy McCarthy reported, Trump sought to block New York State from enforcing the $454 million judgment against him won by Attorney General Letitia James in her recent civil-fraud case. Interest on that owed sum accrues at more than $112,000 per day. According to a court filing, Trump posted a $175 million bond in the case on Monday in the case, halting collection of the larger sum he owes and preventing the state from seizing his assets to satisfy the debt while he appeals.
Last week, it appeared that Trump received a giant infusion of cash when he needed it most. His social-media company Truth Social went public on Tuesday, and shares immediately soared, giving Trump a multibillion-dollar boost to his net worth, despite the company’s poor financials.
Shares of Truth Social dropped on Monday with the release of its latest financial statement.
Truth Social’s debut on the Nasdaq exchange last week happened after the company finalized its $300 million merger with Digital World Acquisition Corporation, a shell company designed to merge with Truth Social. Trump’s stake in the company is worth roughly $3 billion.
But that stock — trading under the symbol DJT on the Nasdaq exchange — has dropped from a high of over $71 per share on March 27 to $48.66 at the close of the markets yesterday.
As for those poor financials . . . yeesh.
Trump Media and Technology Group, which operates the Truth Social platform, reported it lost $58.2 million in 2023 while generating total revenues of $4.1 million, according to the Monday filing with the Securities and Exchange Commission. Trump Media listed its largest expense for the year as interest payments totaling more than $39 million.
The filing includes a note from an independent accounting firm, Colorado-based BF Borgers CPA PC, warning that Trump Media’s “operating losses raise substantial doubt about its ability to continue as a going concern.” In a separate filing Monday, Trump Media cited the auditor’s analysis in describing the risks facing the business. Borgers has worked with Trump Media since 2022.
The note is dated March 25, the day before Trump’s company started trading on the Nasdaq stock exchange under the symbol DJT, surging at first and earning comparisons to so-called meme stocks.
Shares of the company fell more than 21% to $48.66 on Monday. Its market value stood at more than $6.5 billion.
A spokesperson for Trump Media referred a request for comment to a Monday news release that quotes Trump Media CEO and former U.S. Rep. Devin Nunes.
“Closing out the 2023 financials related to the merger, Truth Social today has no debt and over $200 million in the bank, opening numerous possibilities for expanding and enhancing our platform,” Nunes said in the release. “We intend to take full advantage of these opportunities to make Truth Social the quintessential free-speech platform for the American people.”
Devin Nunes! Now there’s a name many of us haven’t heard in a long while.
In the filing, the company acknowledged that it expects to operate at a loss for the “foreseeable future” as it works to expand Truth Social’s user base and attract more advertisers. It said it would be “premature” to predict when it will attain profitability and positive cash flows from its operations.
As of the end of 2023, Trump Media had about $2.6 million in cash on hand and total liabilities of $70.1 million, according to the filing. The company received an infusion of about $300 million from its merger a week ago with shell company Digital World Acquisition Corp.
Most social-media companies make money through advertising, and all the revenue for Truth Social so far has come from advertising sales. But the reach of Truth Social is considerably smaller than that of the bigger-name social-media platforms. As of January, Facebook had 3 billion users worldwide, YouTube reached 2.4 billion, Instagram had 2 billion, and Twitter advertisers reached 372 million.
The new financial statement didn’t say how many users Truth Social has — an ominous sign — but the online-analytics firm SimilarWeb estimated on the first day of public trading that Truth Social had roughly 277,000 U.S. visitors.
This makes the user base of Truth Social a particularly niche audience, and unsurprisingly, the advertisers who are willing to pay to reach this audience are . . . smaller: “Ads from major brands are nonexistent on the site. Instead, the ads on Truth Social are for alternative medicine, diet pills, gun accessories and Trump-themed trinkets, according to an analysis of hundreds of ads on the social network by The New York Times.”
I can hear the comments section groaning about my citing a Times analysis already, but go check out Truth Social for yourself. If you see advertising on Truth Social from a major car company, bank, pharmaceutical company, consumer electronics, electronics, telecom, household products or a cute little gecko telling you he can save you 15 percent or more on car insurance, it will probably be the first.
People bought the stock because they like Donald Trump, or they like the idea of investing in a meme stock propped up by people who like Donald Trump.
Back in the late 1990s, the comic strip Doonesbury depicted a Silicon Valley dot-com “with only one product — its own stock.”
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