New York
CNN
—
shares Trump Media & Technology Group, which owns Truth Social, tumbled on Monday after the company revealed it lost more than $58 million and generated very little revenue in 2023.
These numbers underscore why some experts warn that Trump Media's multibillion-dollar valuation defies logic and is reminiscent of the meme stock craze.
In my organization Deposit Trump Media said Monday it had a loss of $58.2 million in 2023, compared to a profit of $50.5 million in 2022.
The owner of The Truth Social generated just $4.1 million in revenue, though that is up from $1.5 million in 2022.
Not only that, but revenue fell 39% year-over-year in the fourth quarter to just $751,500. This is not what investors want to see from any startup, especially one valued at these levels.
Trump Media shares were down 24% Monday afternoon after the new filings, though they are still up nearly 200% so far this year.
The losses are so severe that Trump Media's accountants warned they “raise significant doubt about our ability to continue as a going concern,” which is what happened on Wall Street: We may not be able to stay in business. The warning is similar to one issued in November when accountants said Trump Media may not survive unless it completes its merger soon to go public.
The long-awaited deal was completed last week, paving the way for Trump Media to receive an influx of nearly $300 million in cash. The company can now use this money to pay off debt and, more importantly, build its infrastructure.
“I think $300 million in cash should remove that 'going concern' risk,” said Matthew Kennedy, chief IPO strategist at Renaissance Capital.
Even though Trump's media company loses money and generates little revenue, so does Wall Street The company is valued at up to $11 billion based on the stock's closing price on Friday, according to Renaissance Capital.
While Trump Media generated just $4.1 million in revenue in 2023, its competitor 2013before its initial public offering in November 2013. Twitter also created a little more than that $5 billion in revenue In the last year before it was turned into a private company by Elon Musk.
The problem for Trump Media is that its main product — Truth Social — is shrinking.
The number of monthly active users in the US on iOS and Android in February fell to 494,000, down 51% year-over-year, according to Sameweb. By comparison, X has 75 million monthly active users in the US. Even Threads has more than 10 times as many users as Truth Social, according to Sameweb.
“2024 is a make or break year for this company,” Kennedy said. “For TMTG, the big thing now is getting in front of the money cannon that is the 2024 presidential election. The company has one notable advantage. Trump-backed super PACs have raised millions. Where do you think they will spend their digital ad collections?”
