The share price of Trump Media fell sharply on Monday after reporting a net loss of $58.2 million on revenue of $4.1 million in 2023. Trump Media & Technology Group shares were trading down by more than 15.7% as of 11:38 a.m. ET. Despite the drop, the company’s market capitalization was still over $7 billion after revealing the loss in its 8-K filing with the Securities and Exchange Commission. A significant portion of the net loss came from $39.4 million in interest expense, according to the filing.
In 2022, Trump Media had a net profit of $50.5 million and total revenue of $1.47 million. The company ended 2023 with only $2.7 million in cash on hand, according to the filing. Trump Media disclosed that it expects to incur operating losses for the foreseeable future. The filing also warned shareholders of the potential greater risks faced by the company due to Trump’s involvement, as well as the presence of “material weaknesses in its internal control over financial reporting.”
Trump owns 57.3% of Trump Media shares, valued at over $4 billion, which represents a significant portion of his total net worth. He is also set to receive 36 million “earn-out” shares over the next three years, subject to the company’s stock hitting certain price benchmarks. The company’s share price surged when it began trading under the ticker DJT after merging with Digital World Acquisition Corp. Analysts attribute the high valuation of the company in part to purchases by Trump’s political supporters, who are enthusiastic about owning part of a company associated with the presumptive Republican presidential nominee.
The unique risks associated with Trump Media include potential user discouragement, advertiser harassment, content provider harassment, hacking risks, reduced need for Truth Social if First Amendment speech is not suppressed, criticism of moderation practices, and increased shareholder suits. These risks stem from the company’s focus on offering and the involvement of President Trump. Trump Media acknowledges the existence of “identified material weaknesses in its internal control over financial reporting,” as stated in previous financial statements for the first three quarters of 2023, which continued to persist as of Monday.
Despite the losses and challenges faced by Trump Media, the company’s significant market capitalization and the ownership stake held by Trump, in addition to the potential “earn-out” shares, highlight the continued interest and investment in the company. The involvement of Trump and his political supporters, as well as the unique risks associated with the company’s offerings and operations, contribute to its current valuation and the uncertainty surrounding its future performance. The filing and public disclosures provide insights into the financial health and outlook of Trump Media, shedding light on both the achievements and challenges facing the company as it navigates the competitive social media market.
