Former President Donald Trump’s social media company, Trump Media & Technology Group, went public this spring with an eye-popping valuation of over $9 billion. However, new data shows that its main product, the conservative-friendly social network Truth Social, is struggling to gain users. Data from Similarweb revealed that Truth Social’s average daily active US users dropped by 19% year over year in April. This decline poses a problem for the platform and for Trump, who is the dominant shareholder in Trump Media and actively uses Truth Social.
The success of social media startups like Truth Social relies heavily on user growth as more users mean more money generated through advertisements. Trump Media itself has warned investors of the importance of growing its user base to ensure business success. Despite claims that Truth Social continues to grow rapidly, data shows that the platform is not performing as well as its competitors. Other social media platforms have experienced varying levels of growth in user numbers, with some even surpassing Truth Social’s usage metrics.
Even with the decline in users, Truth Social’s valuation remains high compared to its relatively small size and struggling user base. With Trump owning a significant stake in Trump Media, valued at nearly $6 billion, the future value of this stake remains uncertain due to the company’s volatile stock prices. The stock price of Trump Media has seen significant fluctuations, leading to a diluted market valuation of $9.4 billion, according to experts. While some argue that traditional metrics like growth and revenue may not apply to Trump Media as a social media stock, the long-term sustainability of the company’s valuation remains uncertain.
The decline in user numbers for Truth Social is reflected in its web traffic, which has also decreased year over year. The platform’s combined web and app audience in the US is significantly smaller compared to larger social media players like Threads and X. Truth Social faces stiff competition from platforms like X, owned by Elon Musk, which have gained popularity among users concerned about censorship on traditional tech platforms. Convincing potential new users of Truth Social’s value will be crucial for the platform’s success and growth in users and market share.
Trump’s involvement and ownership in Trump Media, including his recent receipt of additional shares, add to the complexity of the platform’s future. Despite its struggles with user growth and declining metrics, Trump’s stake in the company remains significant and locked up for a few more months. The volatile nature of Trump Media’s share price and market valuation presents uncertainties regarding its long-term success and sustainability. While the company may be considered a meme stock with unconventional metrics, the convergence of valuation and fundamentals over time will determine its true value and impact in the social media industry.
