Trump Media Needs to Lose More Money Faster
Donald Trump’s digital media company isn’t losing money fast enough.
parent company of society of truth social media apps, Trump Media & Technology Companysaid in a regulatory filing that it suffered a loss of $58.2 million last year. It had a total of $4.1 million in revenue, most of which came from advertising sales.
After the losses were revealed, the stock price plummeted. By midday Monday, the company’s stock had fallen about 23%. As of 1:30 p.m., the stock was trading around $47 to $48 per share, some sort of move by the financial market gods who saw that Trump was about to become president. It seems like a sarcastic joke. 47th President of the United States.
As we expected when stocks soared last week, this decline has been greeted with glee by President Trump’s critics and the economic press. Dan PrimackA well-informed and usually reliable guide to financial markets, he said to himself, “It’s no longer even possible to act as if stock prices have anything to do with real business.”
“At this point, owning TMTG is essentially an in-kind donation to Donald Trump. Both financially and reputationally,” Primack wrote. In recent works For Axios.
However, if that were true, it would be inconceivable that stock prices would fall after financial information disclosure.It’s not like that President Trump’s political outlook It was noticeably worse on Monday compared to last week. Nothing appears to have happened this weekend to persuade investors to reduce their “in-kind contributions” to Trump’s cause.
You have to lose money to gain users
So what surprised investors? Investors may: Disappointed that Trump Media didn’t lose more money last year.
In order to justify its high valuation, Trump Media Needs to Grow Particularly in the mobile advertising market, they expand their user base and boost sales by taking advertising market share from other platforms. This may require companies to spend large amounts of money to promote themselves and improve their products.
Last year, the company’s biggest expense was interest on its debt. Operating expenses Last year, the amount was just $16 million.it suggests Lack of focus or ambition on growthNeither seems appropriate for a company named after the 46th president of the United States.
No one is buying Trump Media stock because they expect it to be moderate in its sense of purpose. Investors probably Trump Media builds it into a “big, beautiful” company.
In that regard, the company took a wrong turn last year. It reportedly lost $49 million in the first nine months of this year. This amounts to a loss of approximately $5.4 million per month. In the final quarter, Losses accumulated at a rate of only about $3 million per month.it suggests unwelcome cowardice As for the management side.
A pedestrian takes a photo of a screen displaying Truth Social stock quotes outside the Nasdaq Market site in New York City on March 26, 2024. (Yuki Iwamura/Bloomberg via Getty Images)
Sales seem to have slumped. The company’s sales for the last three months of last year were $751,000, down from $1 million in the second quarter. Some of this decline may be due to: Advertiser hesitation Promoting its products on a platform named after someone active in the presidential campaign raises the prospect that the company’s user numbers and engagement may also decline.
Many skeptics of Trump Media’s valuation say the level of revenue the company generates is insufficient to justify its market value of around $8 billion. History suggests otherwise. Instagram had no revenue at all when Facebook bought it for $1 billionIn 2012, about two years after the photo-sharing app was launched, he took home $300 million in cash and $700 million in Facebook stock. Analysts say the company probably generated more than $60 billion in revenue last year, about 44% of Facebook’s total revenue.
of Proceeds from the merger with Digital World PAC It would give Trump Media a significant source of liquidity to invest in the company. To meet investor expectations, they need to deploy capital as quickly as financial prudence allows.
The value of a social media platform is a function of two variables: Expected number of users and expected revenue per user. There’s not much the company can do right now to change its expected revenue per user, so it needs to focus on impressing investors with its potential to grow users.
