Truth Social’s Troubles: In a recent securities filing, Truth Socials parent company disclosed a staggering loss of nearly $23 million (£18.7 million) in the first half of this year, sparking concerns about its sustainability.
This filing, unveiled on Monday, provides the public with the first-ever financial insights into Donald Trump’s social media venture, as reported by The Hollywood Reporter. Launched in February last year, Truth Social emerged in the aftermath of the 6 January 2021 Capitol riots, following Trump’s ban from most mainstream social networks.
Despite the return of the former US president to platforms like X (formerly Twitter), Trump asserts that Truth Social remains his primary social media outlet. However, this affiliation has failed to translate into revenue for the platforms parent company, Trump Media & Technology Group (TMTG).
The disclosed figures for the first half of 2023 reveal a staggering loss of $23 million against meager net sales of $2.3 million, prompting doubts about the companys viability and the success of its social media startup, as outlined in the filing.
TMTGs independent registered public accounting firm expressed significant doubt about the companys ability to continue as a going concern due to its financial condition. Management also cast doubt on TMTG’s capability to meet its financial obligations, including liabilities tied to previously issued promissory notes, raising concerns about its financial sustainability.
Beyond TMTG, uncertainties also surround Digital World Acquisition Corporation (DWAC), a Special Purpose Acquisition Company (SPAC), which had previously announced plans to merge with TMTG. An SPAC, designed as a shell corporation, raises funds through a stock exchange listing with the aim of merging with a more prominent entity.
The filing states that DWAC has until 8 September 2024 to finalize a business combination, and there are growing concerns that both TMTG and DWAC might face an uncertain future without the completion of this merger. Failure to conclude the business combination by the specified date could lead to a mandatory liquidation and subsequent dissolution of Digital World.
TMTG anticipates challenges in securing additional funds through traditional financing sources without substantial progress in completing its merger with Digital World. The filing further highlights the historical failures of companies with license agreements with President Trump, emphasizing the uncertain fate of TMTG.
Additionally, TMTG acknowledges various risks to its business, including a dedicated section titled Risks related to our chairman, president Donald J Trump. This section outlines ongoing legal challenges faced by Trump, emphasizing the significant influence of his popularity and reputation on TMTG’s success. The filing warns that adverse reactions or a decline in Trumps popularity could adversely impact TMTGs revenues, operational results, and its ability to maintain or build a consumer base.
Also read: Truth Social Financial Odyssey: Trumps Venture Faces $73M Loss
Our Reader’s Queries
What is the valuation of Truth Social?
The estimated value of TMTG, as per Trump’s financial disclosures to the Federal Election Commission, ranges from $5 to $25 million. This is a significant drop from the initial valuation of $875 million when the social media company merged with DWAC through SPAC.
How big is truth platform?
Truth Social is a social networking service that requires registration to access. With an estimated 607,000 monthly users as of July 2023, it is a popular platform for connecting with others online. As a user, you can create a profile and interact with other members of the community. Truth Social is a great way to stay connected with friends and family, as well as meet new people who share your interests. So why not join the growing community of Truth Social users today?