Donald Trump is facing a financial upheaval. The former US president’s net worth is experiencing a dramatic $1 billion decline, underscored by a concerning performance of his social media enterprise.
Trump Media & Technology Group Corp, the umbrella for the former president’s Truth Social platform, revealed a startling loss exceeding $58 million for the year 2023, painting a grim picture of the venture’s financial health.
Trump Media’s troubled trajectory
The downturn was marked by a sharp 21% drop in the company’s stock price to $48.66 per share, a significant retreat from its position a week prior.
Trump, who holds a 57% stake in the company, saw the valuation of his shares shrink to $3.76 billion, contributing to a descent in his net worth to $6.4 billion, a 14% decline as per Bloomberg’s analysis.
In contrast to its peers, Trump Media’s revenue figures are notably modest, with a mere $4.1 million in revenue for the year. This stands in sharp contrast to companies like Reddit Inc and Snap Inc, which boast substantially higher active user numbers and revenue figures, highlighting a valuation disparity.
Amid these financial troubles, Trump is navigating through a maze of legal challenges, including four criminal prosecutions and a looming criminal trial related to hush money payments.
Furthermore, a $175 million bond looms over Trump following a trial that spotlighted inflated net wealth declarations, adding to his financial strains.
‘Truth Social’ surge amid elections
Interestingly, the stock’s performance seems to diverge from the company’s financial realities, hinting at speculative trading driven by Trump’s re-election bid.
The surge in stock prices, fueled by retail traders on forums like Stocktwits and Reddit’s WallStreetBets, suggests an investment more in Trump’s political future than in the company’s fundamentals.
Despite an incremental revenue rise from the previous year, Trump Media swung to a substantial loss, contrasting sharply with a profit in 2022 driven by convertible notes.
The company’s reluctance to adhere to traditional performance indicators, such as active user metrics, further muddles the picture, raising questions about its strategic direction and growth potential.
Complicating Trump’s financial recovery efforts, a six-month lock-up agreement restricts immediate sale of his stake, straining his liquidity amidst a cash crunch. The company’s merger with Digital World Acquisition Corp injected much-needed funds, averting bankruptcy concerns but casting a long shadow over its future.
Trump Media’s venture, now public post-merger, grapples with SPAC-related volatility and heightened costs for short sellers, highlighting the precarious position of betting against the company. Historical trends show a pattern of initial surges followed by declines for SPACs, suggesting a potentially rocky road ahead for Trump Media.
