Trump Media’s Million Loss: A Cautionary Tale for Political Popularity

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Dismal Earnings Plunge Shares for Trump Media

  • Truth Social owner reports a massive .2 million loss for 2023.
  • Net revenue remains anemic at a mere .1 million.
  • Shares crater by over 25% on Nasdaq, wiping out early gains.

The social media company closely intertwined with former President Donald Trump, Trump Media & Technology Group (TMTG), has hit a rough patch as new financial filings reveal a staggering net loss of .2 million for 2023. This is a stark contrast to the .5 million net profit it reported in 2022. Adding to the dismay, total revenue has barely budged, scraping by at only .1 million last year.

Internal Weaknesses and Operational Concerns

Trump Media’s financial woes stem partly from an eyebrow-raising .4 million in interest expense. Furthermore, the company expressed apprehensions about its ability to remain profitable anytime soon, forecasting ongoing operational losses “for the foreseeable future.”

The filing also raises red flags about potential deficiencies in TMTG’s “internal control over financial reporting.” The company confirmed that these issues remain unresolved as of Monday.

Associated Risks with Trump Involvement

Investors are also cautioned about the unique risks associated with Trump’s involvement in TMTG. The company’s focus and its affiliation with the former president expose it to potential user discouragement, harassment of advertisers, increased hacking threats, and heightened legal scrutiny.

Heavy Reliance on Political Support

Despite these concerns, Trump Media maintains a sizable market capitalization of over .8 billion. This valuation is largely attributed to stock purchases by Trump supporters eager to own a piece of his social media venture. However, analysts note that this enthusiasm introduces another layer of risk for the company.

Trump, the majority shareholder with 57.3% of TMTG’s shares, also stands to gain 36 million additional shares over the next three years if certain stock price benchmarks are met. These targets are currently well above the company’s post-earnings plunge.

Uncertain Future for Truth Social

The significant losses reported by Truth Social, Trump’s preferred platform, cast doubt on its long-term viability. The company acknowledges the “lesser need” for such platforms if First Amendment rights are not suppressed, leaving investors apprehensive about the sustainability of its business model.

Moreover, Truth Social’s moderation practices have drawn criticism, raising concerns about the platform’s ability to attract and retain users. The company’s vulnerability to stockholder suits is another factor that may impede its growth and profitability.

Data sourced from: cnbc.com