Achi news desk-
Donald Trump’s new 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, which trades under the stock ticker DJT (because of course it is), soared after completing its SPAC merger last week. A SPAC, or special purpose acquisition company, is a shell company – in this case, Digital World Acquisition – that goes public with the intention of buying a real company later. For a time, TMTG’s market cap was in the $9 billion range, making it more valuable than Etsy and Hasbro. That raised the former president’s net worth to $7 billion, though not in a way he can immediately capitalize on. Unless the company’s board says otherwise, Trump cannot sell his shares for six months.
However, if I were Trump, I would urge the board to speed up that lock-in period so we can cash out. It seems, let’s just say, unlikely that his media company’s stock price will stay this high forever.
For one thing, TMTG, which owns the conservative Twitter copy Truth Social, does basically nothing. According to a new financial filing from the company released Monday, its revenue totaled $4.1 million in 2023. Extrapolate that out, and the stock is trading at something like 2,000 times the company’s annual revenue. I mean, um, loud. Apple, for example, trades at about seven times its total revenue. And given TMTG’s paltry revenue, it actually lost $58 million last year.
Trump’s company says it has bigger plans ahead, such as growing Truth Social and developing “one or more additional cutting-edge products and/or services” to complement Truth, including some sort of video streaming situation that “provides a ‘home ‘ for canceled content creators.” It is not clear exactly what this might look like, or how many people would flock to it.
Truth Social is estimated to have had about 5 million monthly website visits in February of this year, according to third-party trackers, but the company is not disclosing exact metrics at this time. By comparison, Facebook had 845 million monthly active users when it went public in 2012, and Twitter had 215 million when it IPOed the following year. The long and the short of it is that TMTG is not a thriving business.
But other social media outlets, designed to appeal to the widest possible base, may not be the right comparison. Truth Social and any other business that Trump Media and Technology Group creates is almost certain to appeal only to Trump supporters.
Trump’s media company isn’t the first conservative outfit to go public through a SPAC in recent years and try to make money off right-leaning consumers and investors. Its predecessors have not done so hot. Rumble, the right-wing Peter Thiel-backed YouTube, rose about 40% on its first day of trading in September 2022 and has been hanging well below that ever since. Black Rifle Coffee, Starbucks for Republicans, and Public Square, the GOP’s supposed alternative to Amazon, have followed a similar trajectory: Stocks pop early, then sit below $10 ever since. None of them have achieved sustained profitability, although Black Rifle says it is on track.
I’d guess that Trump has a much better chance of winning the White House (or eventually getting some criminal convictions) than seeing his mediocre social media company take off.
Being in the anti-woke business is not particularly profitable. Although people say they want to shop and invest their values, that is often not the case. Instead, most people choose the convenient option and whatever they are already used to doing. There’s a reason most boycotts don’t work – people are busy and tired. It’s true on the left too. Dig deep enough, and probably every company in the world can give you a reason not to want to give them your money.
Could Trump and Truth Social be any different, at least stock-wise? I mean, I guess anything is possible. As my colleague Peter Kafka points out, investors aren’t shorting the stock en masse yet, partly because it’s difficult to do so and partly because you can see DJT joining the meme-stock crowd. GameStop and AMC weren’t making particularly great business sense when they achieved meme status, yet small-time investors were eager to pile into them. For a good chunk of the country, throwing some cash into the Trump company is not only a way to stick it to The Man but also to The Woke Man. Trump has also spent years insisting that his literal name is worth a ton of money, and it looks like we’re about to find out exactly how much.
Still, I’d guess that Trump has a much better chance of winning the White House (or ending some criminal convictions) than seeing his mediocre social media company take off. He might want to call someone on the TMTG board — say, his son Don Jr. — and see about them getting a meeting on the books to let him start offloading shares sooner rather than later.
Emily Stewart is a senior reporter at Business Insider, writing about business and the economy.
