This photo illustration shows an image of former President Donald Trump reflected on a phone screen displaying the Truth Social app on February 21, 2022 in Washington, DC.
Stefani Reynolds | AFP | Getty Images
The share price of Trump media fell sharply on Monday morning after the social media app company closely linked to former President Donald Trump reported a net loss of $58.2 million on revenue of just $4.1 million for the year reported in 2023.
Trump Media & Technology Group Shares were trading down more than 15.7% as of 11:38 a.m. ET.
Despite this drop, the company’s market capitalization was still more than $7 billion after disclosing last year’s loss in its 8-K filing with the Securities and Exchange Commission.
According to the filing, much of the net loss appears to be attributable to interest expense of $39.4 million.
A spokesperson for the company did not immediately respond to a request for comment on the new filing.
The filing shows that Trump Media had net income of $50.5 million in 2022 and total revenue of just $1.47 million.
The company ended 2023 with just $2.7 million in cash, the filing said.
Last year’s losses at Trump Media – the owner of the Truth Social app routinely used by the former president – could continue for some time, according to the company.
“TMTG expects to incur operating losses for the foreseeable future,” said the announcement, which came a week after the company went public on the Nasdaq under the ticker symbol DJT.
The filing also warns shareholders that Trump’s involvement in the company could pose greater risks to the company than to other social media companies.
TMTG also told regulators that the company identified “material weaknesses in its internal control over financial reporting” when preparing a previous financial report for the first three quarters of 2023.
On Monday, Trump Media stated that these “identified material weaknesses continue to exist.”
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Trump owns 57.3% of Trump Media shares, a stake worth more than $4 billion that would represent well over half of his total net worth, according to Forbes last week.
He will also receive an additional 36 million so-called “earn-out” shares over the next three years if Trump Media shares reach a series of price benchmarks during this period. These targets are all well below the company’s share price as of early Monday.
Trump Media’s stock price soared as the stock began trading on Tuesday, several days after the company merged with a special purpose acquisition company, Digital World Acquisition Corp., which traded under the ticker symbol DWAC. The newly merged company now operates under Trump’s initials DJT.
Analysts point out that the company’s high valuation is due in part to stock purchases by Trump’s political supporters, who are excited about owning part of a company so closely tied to the presumptive Republican presidential nominee.
However, this enthusiasm poses unique risks for the company. The new 8-K filing states that Trump Media “may face greater risks than typical social media platforms due to the focus of its offerings and the involvement of President Trump.”
“These risks include active discouragement of users, harassment of advertisers or content providers, increased risk of hacking of the TMTG platform, reduced need for Truth Social if First Amendment speech is not suppressed, criticism of Truth Social its moderation practices and an increase in shareholder lawsuits.”
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2024-04-01 15:48:19
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