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.
Trump Media said in a regulatory filing 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 want in 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 doubts about our ability to continue as a going concern,” but this is Wall Street’s position: “We cannot continue to operate as a 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’s 2023 revenue was just $4.1 million, while Rival I earned it. Twitter also posted slightly higher revenue. It had $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.
U.S. monthly active users for iOS and Android plummeted to 494,000 in February, down 51% from a year ago, according to SimilarWeb. By comparison, X has his 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. “What matters now for TMTG is that it stands in front of the cash cannon of the 2024 presidential election. And the company has one notable advantage: Trump-backed super PACs have millions of dollars in cash. Where do you think they will spend their digital ad buckets?”
