This story is not an April Fools Day joke.
Trump Media & Technology Group (DJT), the parent company of Donald Trump's social media platform Truth Social, sank more than 22% in midday trading on Monday following its blockbuster debut last week.
The stock drop comes on the heels of an updated regulatory filing early Monday that showed the company taking on heavy losses and facing "greater risks" associated with the former president's ties to the platform.
According to the filing, Trump Media reported sales of just over $4 million as net losses reached nearly $60 million for the full-year ending Dec. 31. The company warned it expects losses to continue amid greater profitability challenges.
"TMTG has historically incurred operating losses and negative cash flows from operating activities," the filing read.
And yes, the ticker symbol for Truth Social is DJT.
Donald Trump's newly public social-media company is not the next Nvidia — or Meta or Google or whatever has happened with X/Twitter.
The share price of Trump Media and Technology Group, trading under the stock ticker DJT (because of course it is), surged following the completion of its SPAC merger last week. A SPAC, or a special-purpose acquisition company, is a shell company — in this case, Digital World Acquisition — that goes public with the intention of buying an actual company later. For a while, TMTG's market cap was in the $9 billion range, making it more valuable than Etsy and Hasbro. That bumped up the former president's net worth to $7 billion, though not in a way he can immediately take advantage of. Unless the company's board says otherwise, Trump can't sell his shares for six months.
If I were Trump, though, I would cajole the board to speed up that lockup period so I could cash in. It seems, let's say, unlikely that his media company's stock price is going to stay so high forever.
For one thing, TMTG, which owns the conservative Twitter copycat Truth Social, makes basically nothing. According to a new financial filing from the company released on Monday, its total revenue was $4.1 million in 2023. Extrapolate that out, and the stock is trading at something like 2,000 times the company's annual revenue. That is, um, high. Apple, for example, trades at about seven times its total revenue. And given TMTG's paltry revenue, it actually lost $58 million last year.
Being in the business of anti-woke is not especially lucrative. As much as people say they want to shop and invest their values, it often doesn't turn out to be the case. Instead, most people opt for the convenient option and whatever they're most used to doing already. There's a reason most boycotts don't work — people are busy and tired. It's true on the left as well. Dig deep enough, and every company in the world can probably give you a reason not to want to give them your money.
His lips move, but I can’t hear what he says.