Trump Media & Technology Group Faces Stock Decline as Truth Social Enters Streaming

Investors who have invested in Trump Media & Technology Group's stock are giving up. Shares of TMTG (DJT) fell by 14% on Tuesday, following an 18% drop on Monday. The reason for the decline on Tuesday was the announcement by the company's flagship product, Truth Social, about a significant expansion into streaming. This move into streaming is a costly venture, with major players like Disney finding it challenging to make a profit in this competitive industry.

TMTG’s stock, which is mostly owned by former President Donald Trump, has dropped over 70% from its all-time high reached on March 26. This was the day after it went public through a merger with a blank-check acquisition company. Although the company is still valued in the billions, it is struggling financially and in need of money. Experts are cautioning investors about trading the stock due to the lack of strong fundamentals to support its high valuation.

In 2023, Trump Media reported a loss of $58 million and generated only $4.1 million in revenue. To raise funds, the company announced on Monday that it would be selling an additional 21.5 million shares to the public. This move, however, would result in a decrease in value for current shareholders.

A platform for 'suppressed' content

Truth Social's streaming initiative failed to excite investors. The company revealed that it has been testing its web, iPhone, and iPad apps for live TV streaming over the past six months. It aims to establish a content delivery network to support streaming apps on mobile devices like phones and tablets, with plans to expand to smart TVs in the future.

Former President Donald Trump and his legal team were seen in Manhattan criminal court on Monday, April 15, 2024, as jury selection was about to begin.

Jabin Botsford/AP

Related article

Truth Social, a streaming network, has proposed hosting live news, religious programming, and family-friendly shows, movies, and documentaries. These are content that has either been cancelled, is facing cancellation, or is being suppressed on other platforms and services.

TMTG CEO Devin Nunes stated that their streaming content aims to provide a permanent home for high-quality news and entertainment that may face discrimination from other channels and content delivery services. He mentioned that there is a lot of great content that struggles to find an audience due to unjust reasons, and they want to assure these creators that they will soon have a guaranteed platform where they won't face cancellation.

The latest efforts from Truth Social seem to be similar to Elon Musk's X, which positions itself as a streaming platform that strongly upholds free speech. However, X boasts hundreds of millions of active users, which is hundreds of times more than Truth Social's audience. Despite this, X has faced challenges in attracting advertisers after Musk made changes to the platform, allowing hate speech and conspiracy theories to proliferate.

Trump's connection to the brand is the main reason for its high value. This has caused the company's shares to become a meme stock, meaning that trading is based more on emotional reactions rather than the company's actual performance.

After TMTG merged with a blank check company in late March, Trump's net worth increased significantly by billions of dollars. However, the value of his shares has since dropped from $5.2 billion to around $1.8 billion. On Tuesday, Trump's net worth decreased by approximately $300 million due to the stock's decline.

Editor's P/S:

The decline of TMTG's stock highlights the challenges faced by companies associated with former President Donald Trump. Despite the initial hype surrounding Truth Social, the company's financial struggles and lack of a clear business strategy have raised concerns among investors. The move into streaming, a notoriously competitive industry, adds to these worries.

Trump's connection to TMTG has contributed to its high valuation, but it also makes the stock vulnerable to fluctuations based on political sentiment and his personal brand. The recent announcement of a stock sale to raise funds further dilutes the value of existing shares, raising questions about the long-term viability of the company. As experts caution investors about the lack of strong fundamentals, it remains to be seen whether TMTG can overcome its challenges and deliver on its promises to investors and users.