Donald Trump’s net worth took a hit of $1 billion following the 21% decline in shares of his social media venture, prompted by the sluggish revenue performance of Truth Social, the platform launched by the former president.
According to filings, Trump Media & Technology Group incurred losses exceeding $58 million in 2023. This announcement sent shockwaves through the market, particularly as it came less than a week after the company’s much-publicized merger debut, Wall Street Journal first reported.
The stock had initially soared during its March 26 launch, buoyed by retail investor enthusiasm, including strong support from Trump’s followers, pushing the former US President’s net worth to $7.2 billion. However, Monday’s disclosure swiftly reversed this trajectory, causing shares to plummet by $13.30, or 21%, settling at $48.66. Trump owns about 57% stake in the company.
What you should know
Reports emphasize that Truth Social had been overvalued, attributing the stock’s decline to its lack of a clear path to profitability and minimal revenues.
Despite the downturn, Trump’s substantial ownership in the company remains noteworthy. With 78.75 million shares, his stake could yield significant returns, although the recent slump has diminished its value. Notably, Trump is barred from selling or leveraging his shares for the next six months, any attempts to circumvent this agreement could prompt further selloffs.
Even with the decline, Trump Media & Technology Group still boasts a market value exceeding $6 billion, albeit lower than social media platform Reddit’s $8 billion market capitalization.
What we know
Although TMTG experienced a surge in hype, it still lags far behind established social media giants like Twitter, Instagram, and TikTok.
The decline in TMTG’s stock also provided relief for short sellers, who saw a substantial gain on Monday, mitigating some of their earlier losses.
Despite reporting an increase in revenue, Truth Social still pales in comparison to its counterparts. Reddit, for instance, recorded revenue of $800 million in 2023, dwarfing Truth Social’s $4.13 million.
Moreover, the company’s refusal to disclose crucial metrics and its uncertain financial outlook have raised concerns among investors. Management expressed doubts about TMTG’s ability to meet its liabilities in its filing, further exacerbating uncertainties surrounding the company’s future.
Additionally, Trump Media is entangled in legal disputes with its co-founders, Wesley Moss and Andrew Litinsky. The ongoing legal battle adds another layer of uncertainty to the company’s already precarious situation.
As the dust settles from Monday’s tumultuous events, the future of Trump Media & Technology Group remains uncertain, with its viability as a challenger to established social media platforms still in question. (Nairametrics)
