new york
CNN
—
shares of Trump Media & Technology Group, owner of Truth Social, fell sharply on Monday after the company revealed it would lose more than $58 million in 2023 and generate little revenue.
The numbers highlight why some experts are warning that Trump Media’s multibillion-dollar valuation defies logic and is reminiscent of the meme stock boom.
within the regulations filing Trump Media reported Monday that it had a loss of $58.2 million in 2023, compared to a profit of $50.5 million in 2022.
The Truth Social owner posted revenue of just $4.1 million, up from $1.5 million in 2022.
Not only that, but fourth-quarter revenue was down 39% year-over-year to just $751,500. That’s not what investors expect from any startup, especially one valued at this level.
Trump Media shares fell 24% Monday afternoon following the new filing, but are still up nearly 200% since the beginning of the year.
The losses were so severe that Trump Media’s treasurer warned that it “raises significant questions about our ability to continue as a going concern,” but this is Wall Street’s position: “We cannot continue to do business.” It may disappear.” The warning echoes a warning from accountants in November that Trump Media may not be able to survive unless it quickly completes its merger and goes public.
The long-delayed deal was completed last week, clearing the way for Trump Media to receive about $300 million in cash. The company can now use these funds to pay down debt and, importantly, build infrastructure.
“With $300 million in cash, this ‘going concern’ risk should be removed,” said Matthew Kennedy, senior IPO strategist at Renaissance Capital.
Even though Trump Media is losing money and making little money, Wall Street Renaissance Capital said it valued the company at up to $11 billion based on Friday’s closing price.
Trump Media earned just $4.1 million in 2023, while rival X (formerly Twitter) earned more than 100 times that amount, at $665 million. 2013was made in advance of the company’s initial public offering in November 2013. Twitter also saw a slight increase. $5 billion in revenue in its final year before being taken private by Elon Musk.
The problem for Trump Media is that its main product, “Truth Social,” is shrinking.
Monthly active users of iOS and Android in the U.S. plummeted to 494,000 in February, a 51% drop from a year ago, according to SimilarWeb. By comparison, X has 75 million monthly active users in the US. According to Samelweb, even Threads has 10 times more users than Truth Social.
“2024 is a critical year for this company,” Kennedy said. “The important thing for TMTG now is to be in front of the big guns of the 2024 presidential election. And the company has one notable advantage: Trump-backed super PACs have millions of dollars in Collected. Where do you think they’ll spend their digital ad buckets?”
