Trump's Truth Social Sees Shares Plummet Over 50% Amid Financial Woes

Donald Trump's media firm, Truth Social, has experienced a significant decline in its stock price, with shares sliding by more than 50% since the company began public trading. Despite an initial impressive valuation, the social media platform has faced mounting concerns over its operating losses, low revenue, and undisclosed audience numbers.

Truth Social's parent company, Trump Media & Technology Group, completed its merger with Digital World Acquisition Corp. (DWAC) on March 26, 2024, taking the company public. The stock, trading under the ticker symbol DJT, reached a high of $79.38 in its first day but has since plummeted. As of Tuesday, the shares hit an all-time low of $22.55, representing a more than 50% drop from the initial trading price.

Financial filings reveal that Truth Social generated only $4.1 million in revenue in 2023 while incurring a staggering loss of over $58 million. The company has acknowledged that it expects to continue facing operating losses and negative cash flows for the foreseeable future. Interest expenses alone amounted to $40 million in 2023, further compounding the firm's financial woes.

Why this matters: The steep decline in Truth Social's stock price raises questions about the long-term viability of the platform and its ability to compete in the crowded social media market. The company's financial struggles and lack of transparency regarding its user base have led to skepticism among investors and analysts.

In an effort to address the falling stock price, Truth Social CEO Devin Nunes has accused major market participants, including Citadel Securities, of engaging in illegal "naked" short selling. Nunes sent a letter to the Nasdaq CEO, alleging that these firms are responsible for over 60% of the extraordinary trading volume in DJT shares. Citadel Securities strongly denied the accusations, calling Nunes a "loser" and stating they would fire him if he worked for them.

Despite the company's efforts to prevent short selling, experts warn that the stock lacks the fundamentals to justify its current valuation. Trump, who owns roughly 60% of the company's shares, has seen the value of his stake plummet from over $5 billion to around $2.1 billion as of Tuesday. The influx of new shares through exercised warrants threatens to further dilute current investors' holdings.

Key Takeaways

• Trump's Truth Social platform faces over 50% stock price decline since going public.
• Truth Social generated only $4.1M in revenue in 2023 but incurred $58M in losses.
• CEO Nunes accused major firms of illegal short-selling, but experts warn of lack of fundamentals.
• Trump's stake in the company has plummeted from over $5B to around $2.1B.
• Truth Social plans to issue over 21.4M shares to raise $247.1M, further diluting existing shareholders.