The reckoning for Donald Trump’s highly overvalued social media company is coming faster than anyone expected. The stock debuted a few days ago at $70 a share, rose to $78, then dropped into the 60s. Today the stock price plunged after the company reported its losses for 2023. At 3:30 pm, it was selling for $48.07.
Drew Harwell of The Washington Post wrote:
Former president Donald Trump’s social media company said Monday it lost more than $58 million last year, sending its stock plunging roughly 25 percent only days after a highflying public debut valued it at more than $8 billion.
Trump Media & Technology Group, which owns Truth Social, said in a new Securities and Exchange Commission filing Monday that the company generated just over $4 million in revenue last year, including less than $1 million in the last quarter of 2023.
The nosediving share price of the company — which uses the stock ticker DJT, for Trump’s initials — shaved off a quarter of its market value in a single day. It also slashed the value of Trump’s 57 percent ownership in the company by roughly $1 billion, to $3.6 billion.
The new financial figures throw into stark relief the gap between Trump Media’s highly hyped investor-driven valuation on the public stock market and the reality of its business performance.
It also raises questions about the possibility that Trump could use the company as a financial lifeline. Trump cannot sell his shares or use them as collateral for a loan for six months due to a provision in the company’s merger agreement, known as a lockup.
The company’s board could vote to waive that requirement but has yet to do so, the filings state. Cashing out early could sink the stock price further by flooding the market with shares and undermining investor confidence in Trump’s commitment to the brand, financial analysts said.
Trump, who invested no money in Trump Media, was given 78 million shares of the company last week and stands to earn tens of millions more over the next three years if the stock stays above $12 to $17, a filing shows.
Trump Media said in a filing that it expects to incur more “operating losses and negative cash flows” as it works to expand its user base but that it expects its growth will come from Truth Social’s “overall appeal.”
The company said in a filing that its management had “substantial doubt” as of the end of last year that it would have enough money to pay its debts as they come due. The company paid nearly $40 million in interest expenses last year and racked up about $16 million in operating losses.
Diane Ravitch's blog 
It’s a meme stock, basically.
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The stock dropped to $48.
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Still mind-bogglingly overvalued.
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Yep. No profits. Heavy loses. Low traffic on the site. An article in U.S. today said it could drop as low as $2. But even at that price, Trump would make a lot of money. And he paid nothing for his 58 million shares.
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Also: a business model disturbingly tied to the presence of a madman who will be dead, incapacitated, or in prison within 5-10 years.
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In contrast, Dollar General stock closed at @$158. The dollar store is worth more than Trump.
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Tout ce que Trump touche devient de la merde!
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Haaaa!!!
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can probably sell to China ……
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Even Putin can’t keep that price up that high forever by buying shares online through a foreign shell company.
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Another Trump scam, like his fake charity and his fake university
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I’ll bet there’s still plenty of time to sell short.
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Trump may already be selling short
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From their 8-K filling:
“TMTG believes that adhering to traditional key performance indicators, such as signups, average revenue per user, ad impressions and pricing, or active user accounts including monthly and daily active users, could potentially divert its focus.
TMTG may find it challenging or cost-prohibitive to implement such effective controls and procedures and may never collect, monitor, or report any or certain key operating metrics.
TMTG does not currently, and may never, collect, monitor or report certain key operating metrics used by companies in similar industries.
snip
the Company has until September 8, 2024 to consummate a Business Combination. It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. ”
Snip
In other words, Truth Social doesn’t collect or report the key value metrics that the value of a social network is based on. And it probably never will. And they will probably go under and claim bankruptcy by September. So exactly how is he making money? Mainly it is just all paper assets to make him look good.
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Interesting & helpful, thanks. Just guessing (I am clueless on this stuff), sounds like he’s betting he can scrape up enough before it’s liquidated to pay up (or finance) the penalty owed to NYS.
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He can’t use the stock for anything except on paper. He can’t cash it in (SEC rules) and he can’t use it for collateral since it really is worth absolutely nothing.
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His hand-picked board could permit him to sell before the 6-months are up, but the stock price would collapse if he did
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I suspect that this will be junk status in the not-too-distant future.
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Granted I know zip about stocks, but I somehow thought one needed to have a successful, in-the-black biz before going public. Reddit, e.g., mentioned in the WaPo article as having gone public the same week at a similar price, had been around since 2005 and established a huge, highly-valued biz before filing for IPO in 2021.
Guess it truly is, as FLERP says, a “meme stock”– defined in the article as “value derived less from its fundamentals [financial performance] and more from investors’ personal feelings about its namesake brand.” Strike while the iron is hot, i.e., while election fervor is high, and before losing a bunch more court cases. The MO sounds a lot like what he got into legal trouble for in NYS, overstating the value of RE holdings in order to get bigger bank loans.
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Once a grifter, always a grifter.
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