Shares of Trump Media & Technology Group, the parent company of the Truth Social platform, fell nearly 18% on Monday due to concerns raised about its ability to meet its financial liabilities. The company reported a net loss of $58.2 million in the year ended December 2023, compared to a net profit of $50.5 million the previous year. Revenue increased to $4.13 million last year from $1.47 million in 2022. Trump Media stated that it had doubts about its ability to meet its liabilities, including those related to promissory notes.
The company expects to continue incurring operating losses and negative cash flows as it focuses on expanding its user base and attracting more platform partners and advertisers. While its shares initially gained more than 16% on its first trading day on March 26, they have since seen choppy trading, falling for the second consecutive session on Monday. A Delaware judge has requested Trump Media and its co-founders, Wesley Moss and Andrew Litinsky, to set a date for a hearing this month to determine if the pair should receive the 8.6% stake in the company they claim they are owed.
Trump Media and its co-founders are currently embroiled in lawsuits against each other in Delaware and Florida state courts. The co-founders have accused the company of attempting to dilute their stake improperly, while the company claims that they have not earned their shares and seeks to strip them of their ownership. Trump Media also wants a judge to declare that Moss and Litinsky have no right to appoint two board members. The ongoing legal battle adds to the company’s challenges as it struggles to maintain financial stability and investor confidence.
The initial enthusiasm from retail investors, including supporters of former President Donald Trump, has waned since the company’s public debut through a blank-check merger. Trump Media’s struggles to meet its financial obligations have raised concerns among investors, leading to the decline in its share price. The company’s uncertain financial future, combined with the legal disputes with its co-founders, has contributed to the volatility in its stock price.
Despite efforts to attract more users and advertisers to the Truth Social platform, Trump Media continues to face challenges in generating revenue and achieving profitability. The company’s ongoing losses and negative cash flows indicate the difficulties it faces in establishing a sustainable business model. The outcome of the legal battles with its co-founders may further impact Trump Media’s ability to navigate its financial difficulties and secure its long-term viability in the competitive social media landscape.
In conclusion, Trump Media & Technology Group’s struggles to meet its financial obligations and resolve legal disputes with its co-founders have led to a decline in investor confidence and a decrease in its share price. The company’s ongoing losses and uncertain outlook for profitability raise concerns about its ability to sustain its operations in the long term. Trump Media’s challenges in expanding its user base and attracting advertisers highlight the competitive nature of the social media industry, further complicating its path to financial stability and success.
