Former President Donald Trump’s social media enterprise reported a loss exceeding $58 million for the previous year, causing its stock to plummet by over 21%. This downturn occurred just days after its impressive initial public offering valued the company at over $8 billion. Trump Media & Technology Group, the parent company of Truth Social, disclosed in a filing with the Securities and Exchange Commission that it generated slightly over $4 million in revenue last year, with less than $1 million in the final quarter.
The company’s stock, identified by the ticker symbol DJT representing Trump’s initials, experienced a sharp decline, hitting its lowest point since its recent public offering. Consequently, Trump’s 57% ownership stake in the company depreciated by approximately $1 billion to a valuation of $3.8 billion.
The latest financial data starkly contrasts Trump Media’s lofty investor-driven valuation on the public market with its actual business performance. This disparity raises concerns about the potential for Trump to utilize the company as a financial safety net. However, due to a lockup provision in the merger agreement, Trump is barred from selling his shares or using them as collateral for six months.
Although the company’s board could waive this requirement, no action has been taken thus far, according to the filings. Financial analysts caution that an early sell-off by Trump could further depress the stock price by flooding the market with shares, potentially eroding investor confidence in Trump’s dedication to the brand.
Despite not investing any capital in Trump Media, Trump received 78 million shares of the company last week and stands to gain additional shares over the next three years if the stock maintains a value above $12 to $17, as disclosed in the filing. In a filing, Trump Media expressed anticipation of incurring further “operating losses and negative cash flows” during its efforts to expand its user base. However, it remains optimistic about the growth potential driven by the overall appeal of Truth Social.
The company also acknowledged in the filing that its management harbored “substantial doubt” regarding its ability to meet debt obligations by the end of the previous year. With nearly $40 million paid in interest expenses and approximately $16 million in operating losses accrued last year, financial challenges loom.
Last week’s merger deal with Digital World Acquisition, a special purpose acquisition company that facilitated Trump Media’s public debut, unlocked approximately $300 million in investor funds for Trump’s company.