Former president Donald Trump has expressed his excitement about his social media platform, Truth Social, which debuted in March and saw him earn $4.1 billion in net worth in a single day. However, since then, the stock has plummeted by over 40%, reducing Trump’s fortune by about $1 billion as of Thursday. Despite this, the market capitalization of Trump Media & Technology Group, the parent company of Truth Social, remains at $5.2 billion, comparable to companies like Macy’s and Planet Fitness.
Truth Social has faced skepticism over its high valuation, as the company reported losses of over $58 million in 2023 on revenues of just $4.1 million. Additionally, only 9 million people have signed up for the site, a small fraction of competitors like Twitter and Threads. The company’s stock is trading at a multiple of 1,270, far exceeding the average price-to-sales ratio of companies on the Nasdaq.
A spokesperson for Trump Media & Technology Group stated that the company currently has no debt and over $200 million in the bank, positioning Truth Social as a free-speech platform for the American people. However, critics and experts remain skeptical about the company’s future success. S3 Partners labeled DJT as the most shorted SPAC in the U.S., with media mogul Barry Diller calling the company’s lack of revenue “ridiculous.”
Forbes has been tracking the value of Trump Media & Technology Group since its founding in 2021. The company’s market value is estimated at $5.2 billion, with Trump’s share amounting to $3 billion. Additionally, a transaction value of $800 million was suggested by institutional investors who paid $50 million for notes redeemable for shares at $8, indicating where the business might be realistically valued. Based on its fundamentals, Truth Social could be worth between $40 million to $90 million, considering its small revenue, user base, and anticipated revenue per user compared to industry benchmarks like Twitter and Facebook.
Overall, the future of Truth Social remains uncertain, with its high valuation and lack of revenue raising concerns among investors and experts. Trump’s majority stake in the company is currently under a lock-up agreement, limiting his ability to access his newfound wealth until September. The success or failure of Truth Social will largely depend on its ability to attract and retain users, generate revenue, and prove itself as a viable competitor in the crowded social media landscape.
