Trump’s $10bn media group sinks 21% after disclosing widening losses

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Donald Trump’s media business generated less than $1mn in revenue in the fourth quarter, highlighting the lossmaking business’s precarious financial position even as it maintains a market capitalisation of nearly $10bn.

Trump Media & Technology Group was taken public last week in a merger with a blank-cheque company, which increased the former US president’s wealth on paper by billions of dollars.

Financial results filed on Monday show that the owner of Trump’s Truth Social platform took in just $751,500 in revenue in the fourth quarter of 2023, a decrease of more than 25 per cent on the previous quarter. The company said it has signed up 9mn users, including Trump.

Shares in the social media group sold off after publication of the results, closing down more than 21 per cent in New York at $48.66. That was below the $49.95 price recorded the day before the merged company began to trade.

According to the filing with the Securities and Exchange Commission, all of TMTG’s revenue comes from advertising on Truth Social, which was launched in February 2022 to “rival Big Tech”. The company also disclosed an annual net loss of $58mn, increasing from the $50.5mn it lost in 2022.

TMTG’s auditor, BF Borgers CPA, warned in a report dated March 25 that the company’s operating losses “raise substantial doubt about its ability to continue as a going concern”, according to the company’s SEC filing.

After Monday’s fall in the stock price, Trump’s stake in TMTG is worth nearly $4bn, while a small group of unheralded financiers and hedge funds that helped take the company public have stakes worth more than $100mn, according to Financial Times calculations of TMTG’s fully diluted value.

The numbers underline the disconnect between the company’s market valuation, which at one point topped $14bn, and its business fundamentals. Trump and other insiders at TMTG will be restricted from selling their stock for at least six months, according to securities filings, amid speculation that the former president could use his stake to raise cash to cover extensive legal liabilities.

As of mid-February, Truth Social said it had 9mn sign-ups, but said it would not provide disclosures of active users or revenues per user, which are standard financial details made by other social media companies, such as X and Meta. Elon Musk’s social media platform last said in September it had about 550mn monthly active users and 245mn daily active users.

TMTG said in a filing it believes publishing standard disclosures such as average revenue per user, ad impressions and pricing, or daily active users, could “divert its focus from strategic evaluation with respect to the progress and growth of its business”. The company warned that it may never provide these numbers

“[Focusing] on these [performance indicators] might not align with the best interests of TMTG or its shareholders, as it could lead to short-term decision-making at the expense of long-term innovation and value creation,” it further said.