Trump Media Group Reports Over $300 Million Loss with Minimal Revenue in Recent Quarter

Trump Media & Technology Group, the owner of Truth Social, reported a loss of over $300 million and minimal revenue in the first quarter, according to a press release on Monday. This raises concerns about the company's high valuation, especially since it is mostly owned by former President Donald Trump.

Trump Media (DJT) announced a loss of $327.6 million in the first quarter, a significant increase from $210,300 in the same period last year.

In their press release, Trump Media emphasized their focus on long-term product development over short-term revenue. They recognized that their advertising business is in its early stages and expressed optimism that new products like streaming will improve their performance in the future.

The company attributed the losses to non-cash expenses resulting from converting promissory notes and getting rid of past liabilities.

In a statement, Trump Media CEO Devin Nunes expressed relief after completing a lengthy merger process. He mentioned that most merger-related expenses have been settled, leaving the company well-funded. Nunes also highlighted the support from retail shareholders who share the company's goal of challenging Big Tech censorship to protect free speech.

Trump Media recorded an operating loss of $12.1 million, mainly due to expenses linked to its merger with a blank-check company. In terms of revenue, the company only brought in $770,500, making it the second consecutive quarter with revenue below $1 million.

Trump Media reassured that they have enough cash to support their business operations for the foreseeable future. As of the end of March, the company reported a cash balance of $274 million, which was strengthened by their recent decision to go public.

Additionally, Nunes mentioned that this cash reserve allows Trump Media to consider potential mergers and acquisitions in the future.

Trump Media recently announced that its financials were reviewed by Semple, Marchal & Cooper, their new accounting firm. This decision came after the company's previous accounting firm was accused of "massive fraud" by federal regulators. It's important to note that regulators did not make any allegations of wrongdoing against Trump Media in relation to the charges against the auditor.

Many experts have expressed their surprise at the high price of Trump Media stock, as it seems to not align with the company's financial performance and limited presence in the social media industry.

Despite the initial excitement surrounding its public debut earlier this year, Truth Social is still considered a relatively small platform in the world of social media.

In April, data from market research firm Similarweb revealed that the conservative-leaning network saw a decline of 19% in its average daily active users in the US on iOS and Android, with only 113,000 users. In comparison, rival X (previously known as Twitter) boasted over 34 million users on these platforms, while Instagram's Threads had 3.5 million users.

Editor's P/S:

The dismal financial performance of Trump Media & Technology Group raises concerns about the company's viability and the inflated valuation it received upon going public. Despite its minimal revenue and substantial losses, the company's stock price remains high, largely due to the support of retail investors who align with Trump's political views. However, as the company continues to struggle to gain traction in the social media market, it is unclear whether its current valuation is sustainable.

The company's emphasis on long-term product development and optimism about future revenue streams may not be enough to offset the current financial challenges. The declining user base of Truth Social, coupled with the company's limited presence in the broader social media landscape, suggests that it may face an uphill battle in establishing itself as a major player in the industry. It remains to be seen whether Trump Media can execute its long-term plans and turn its financial situation around, or if the company will become another casualty in the highly competitive social media market.