Donald Trump’s social media venture witnessed a dramatic downfall, with its shares plummeting over 20% just days after its public debut under the DJT ticker. The nosedive follows reports revealing staggering losses of nearly $60 million in the previous year, coupled with meagre revenues of around $4 million.
The abrupt decline dealt a severe blow to the former president’s net worth, causing it to shrink by a whopping $1 billion, according to Bloomberg. While initial enthusiasm led to a surge in share prices, propelling the company’s valuation to $11 billion, experts cautioned that such exuberance was unsustainable.
The trajectory of Trump Media & Technology Group’s stock drew parallels to the meme stock frenzy of the pandemic era, where companies like GameStop and AMC witnessed meteoric rises despite fundamental weaknesses in their businesses. Truth Social, the main product of Trump’s media company, faced challenges of dwindling users and financial hemorrhage.
The stock’s Monday downturn saw Trump Media shares plummet by $13.30 to $48.66, though they remain significantly higher, up nearly 200% since the beginning of the year. Much of this surge has been driven by retail investors, many of whom seem to be expressing solidarity with the former president amidst his legal battles.
Despite Mr. Trump’s majority ownership stake in the company, which could yield him substantial gains upon share liquidation, the company’s SEC filing painted a bleak picture. Trump Media expects to continue incurring operating losses and negative cash flows for the foreseeable future, raising concerns about its financial viability.
Since its launch in February 2022, Truth Social has struggled to attract a sizable user base, with estimates suggesting around five million active monthly users, far below its competitors. Despite claims of approximately 8.9 million sign-ups, the company has refrained from disclosing key performance metrics, leaving shareholders in the dark about its operational performance.
