Donald Trump’s financial worth has taken a hit, falling by $1 billion, while his social media enterprise’s shares have experienced a slump, too. This follows a report that his company, Trump Media & Technology Group Corp, suffered a loss of over $58 million in 2023, revealing a slow income flow from his Truth Social platform. The corporation saw its stocks plunge by 21 percent on Monday, slipping to $48.66 per share, beneath the previous week’s trading price of $49.95 per share. The data in the filings with the US Securities and Exchange Commission show that Trump retains 57 percent ownership of the company, making his current interest worth approximately $3.76 billion.
This depreciation drives his net wealth down to $6.4 billion, representing a 14 percent drop, as researched by Bloomberg. Despite reporting a mere $4.1 million revenue for the year, the company’s performance this year has seen a significant rise. Its market value currently stands around $6.6 billion, largely owing to its popularity amidst retail traders as a meme stock.
For comparison, Reddit, which became a publicly traded company recently and has similar market valuation, had 267.5 million weekly active users in its last quarter and generated $804 million in earnings last year. Meanwhile, Snap, valued at $19 billion, suffered a net loss of $1.3 billion on $4.6 billion worth of sales the previous year. Notably, Trump Media does not share figures on active user counts.
Although Trump’s popularity among retail traders has soared, he continues to battle several legal issues, including four criminal charges. The initial trial, where he’s accused of disguising hush-money payments to a porn actress prior to the 2016 elections, is due to commence on April 15th. Further, he faces an April 4th cut-off date to pay a $175 million bond, following a court ruling that he had overly inflated his net wealth by billions in banking transactions. At present, he is disputing this verdict.
Observers suggest that the inconsistent relationship between Trump Media’s share price and the firm’s financial reality paints a picture of investors looking to voice support for Trump’s re-election aspirations, using the stock as a political statement. These shares, which have been in circulation through the SPAC’s ticker since 2021, have seen a significant threefold increase this year as day traders fervently discuss and promote it on platforms such as Stocktwits and the WallStreetBets forum on Reddit.
In its latest reports, the media company reported slight growth in its revenue from £1.47 million in 2022, despite an overall annual loss. This change in fortune came after a surprising £50.5 million profit in 2022, following adjustments in regard to its convertible notes.
Unusually for a social media firm, Trump Media does not disclose traditional key performance indicators such as active users or revenue per user, claiming such metrics may distract from the strategic evaluation of business growth, according to the disclosed prospectus. The company has so far resisted revealing the number of Truth Social’s users when requested by regulators, it has only been compelled to uncover the number of sign-ups.
An active six-month lock-up agreement in place prohibits Mr Trump from promptly selling his shares, in turn restricting his ability to generate immediate revenue from these holdings during his current cash-crisis.
Just last week, the merger with Digital World Acquisition Corp. was finalised, bringing a cash injection of well over £275 million to Mr Trump’s media start-up. The firm had earlier raised concerns over bankruptcy threats, highlighting the merger deal as a lifeboat.
Challenging the company with short sales is an expensive gamble due to the bloated valuation of its shares, with borrowings facing annual financing costs of 500 percent, brokerages have narrated. S3 Partners, a finance analytics firm, is reporting that it is by far, the riskiest US firm to bet against with short sales exceeding £100 million.
Historical trend reveals that shares of companies going public via SPACs have generally seen extreme volatility around the merger completion days, regardless of little changes in their underlying fundamentals. Numerous stocks, including Vinfast Auto, have seen tremendous surges in share prices as the limited stock availability incites traders to push the stock prices to the limits, only to inevitably crash eventually. As per Bloomberg, more than a fifth of almost 500 SPAC deals completed since 2019 have shares now trading under £1 each, indicating a decline of over 90%.