Trump Media & Technology Group, the business that owns Truth Social, saw a sharp decline in its stock price on Monday following its announcement that it lost over $58 million and saw virtually little sales in 2023. The company’s biggest shareholder, former President Donald Trump, had a more than $1 billion decline in his net worth on Monday.
The numbers highlight the reasons why some analysts caution that Trump Media’s multibillion-dollar valuation is illogical and evocative of the meme stock frenzy.
Trump Media reported financial losses of $58.2 million in 2023 as opposed to profits of $50.5 million in 2022 in a regulatory filing on Monday.
Although it was an increase from $1.5 million in 2022, the owner of Truth Social only made $4.1 million in income.
Furthermore, income decreased 39% from the previous year in a mere $751,500 in the fourth quarter. Investors want better than that from a start-up, particularly one with this valuation.
In the wake of the fresh disclosures, Trump Media’s shares fell 21% on Monday, although they have still increased by about 200% this year.
Donald Trump, the former president, holds a dominant 78.8 million shares in the recently listed business. Based on the pricing as of Monday afternoon, that stake is currently valued at almost $3.8 billion. Trump’s net worth has increased greatly as a result, despite the fact that it has decreased somewhat from its peak of roughly $6.3 billion just last week.
Trump Media’s accountants cautioned at the time that the losses revealed on Monday “raise substantial doubt about its ability to continue as a going concern” since they were so large.
Wall Street speak for “concern” is “We might not be able to stay in business.” This caution is similar to one that accountants issued in November, stating that unless Trump Media quickly completed its merger in order to go public, company might not survive.
Last Monday, the long-awaited merger was finalized, enabling Trump Media to get an infusion of roughly $300 million in cash. With those money, the corporation can now pay off debt and—more importantly—invest in expanding its infrastructure.
“I think the $300 million in cash should eliminate this ‘going concern’ risk,” Renaissance Capital senior IPO strategist Matthew Kennedy stated.
