On November 8, 2024, President-elect Donald Trump categorically refuted rumors that he was considering selling his shares in Truth Social, his social media platform. His denial triggered a massive 15% spike in the company’s stock price in just one day, fueled by recent fluctuations in the stock and Trump’s election victory.
Trump took to his own platform, Truth Social, to address the rumors, stating, “There are fake, untrue, and probably illegal rumors and/or statements made by, perhaps, market manipulators or short sellers, that I am interested in selling shares of Truth. THOSE RUMORS OR STATEMENTS ARE FALSE. I HAVE NO INTENTION OF SELLING!”
Trump, who holds a 56.6% stake in Trump Media & Technology Group (TMTG), the parent company of Truth Social, called for an investigation into those disseminating the sale rumors. Trump’s TMTG shares, amounting to 114.75 million, are estimated to be worth around $4.2 billion after the post-election stock upswing, representing the largest chunk of his net worth.
Truth Social’s financial journey has been anything but smooth. In 2023, the platform reported a loss of $49 million against a revenue of $3.4 million in the first nine months. To put this into perspective, Facebook, now known as Meta, had already turned a profit and generated $3.71 billion in revenue in the year before its public debut. Truth Social, on the other hand, has a relatively small, niche user base that doesn’t have the global reach of other publicly traded social media platforms.
Data from SimilarWeb suggests that as of February 2024, Truth Social attracted approximately five million global website visits per month, with about one million active app users in the United States. However, unlike its larger counterparts, Truth Social has not revealed its user engagement metrics, an unusual step for a company going public. To compare, Facebook boasted 845 million monthly active users at the time of its IPO in 2012, while Twitter, now X, had 215 million in 2013.
The latest quarterly report revealed a net loss of $19.2 million on a revenue of just over $1 million, with legal expenses exceeding $12 million. TMTG’s fluctuating stock price mirrors market speculations on Trump’s political future, pushing its market cap to roughly $10 billion. However, analysts point out that this valuation seems disconnected from the company’s financial fundamentals, indicating a possible challenge in maintaining its current market value.
Truth Social has a modest user base of about two million active users and five million monthly visits globally. User engagement has dipped by over 39% compared to the previous year, underlining the struggle to keep up with larger platforms. Despite this, TMTG recently launched Truth+, a video streaming platform, which executives see as a potential revenue source. CEO Devin Nunes is optimistic about Truth+, viewing it as “a major driver of long-term earnings and shareholder value” and has mentioned possible mergers with companies that could leverage Truth Social’s technology.
Speculations about a potential merger with Elon Musk’s X have further stirred the pot. Despite the vast difference in user base – X has 611 million active monthly users compared to Truth Social’s two million – recent valuations show TMTG surpassing X Holdings, sparking merger talks. Neither company has confirmed any plans, but the speculation has piqued interest in TMTG’s stock, which is being traded more as a “meme stock” than a reflection of its financial fundamentals.
As Trump gets ready to re-assume office, the question of his TMTG stockholding poses ethical concerns. Federal rules might necessitate him to divest his shares to avoid potential conflicts of interest. In his previous presidency, Trump had transferred control of his businesses to his sons to sidestep such issues. The heightened federal scrutiny he now faces may impose added pressure to put TMTG assets in a blind trust, given the stock’s significant influence on his financial position.
