On November 8, 2024, President-elect Donald Trump vehemently dismissed allegations regarding the potential sale of his ownership in Truth Social. This announcement led to an immediate 15% rise in the share price of the social media platform. The stock market’s speculation about the future of Truth Social was stirred up by the recent fluctuations in its stock price and Trump’s election victory.
Trump refuted the rumors on his own platform, Truth Social, 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!”
As the owner of 56.6% of Trump Media & Technology Group (TMTG), the parent company of Truth Social, Trump called for an inquiry into the sources of these rumors. His ownership, which amounts to 114.75 million shares, is currently valued at approximately $4.2 billion following the post-election surge in the stock price, making it a significant part of his net worth.
Truth Social’s financial journey has been unstable, with challenges in user retention and revenue generation. In the first three-quarters of 2023, the platform reported a revenue of $3.4 million and total losses of $49 million.
In comparison, when Meta, formerly known as Facebook, made its initial public offering, it already had a revenue of $3.71 billion from the previous year and was profitable. However, Truth Social is much smaller with a specific, niche user base that doesn’t have the global presence of other publicly traded social media platforms.
As per SimilarWeb’s estimates, as of February 2024, Truth Social had roughly one million active app users in the United States and received about five million monthly global website visits.
Unlike its larger counterparts, Truth Social has not disclosed its user engagement metrics, an unusual practice for a publicly-traded company. For comparison, Facebook had 845 million monthly active users (MAU) in 2012 when it went public, and X, previously Twitter, had 215 million in 2013.
The most recent quarterly report showed a revenue of just over $1 million and a net loss of $19.2 million, largely due to legal expenses surpassing $12 million. The fluctuating stock price of TMTG, reflecting market speculations about Trump’s political future, contributes to its current market capitalization of about $10 billion. However, financial analysts have noted that this valuation seems to be disconnected from the platform’s financial performance, indicating the difficulty in maintaining its current worth.
Truth Social has a small user base of approximately two million active users, attracting around five million global visits per month. The platform has seen a decline in user engagement by over 39% compared to the previous year. Despite these challenges, TMTG recently launched Truth+, a video streaming platform that the executives believe could generate revenue. CEO Devin Nunes sees Truth+ as “a major driver of long-term earnings and shareholder value” and mentioned the possibility of merging with firms that could leverage Truth Social’s technology.
Speculation about Truth Social’s future has been further fueled by rumors of a possible merger with Elon Musk’s X. Despite X boasting 611 million active monthly users compared to Truth Social’s two million, recent valuations have shown TMTG surpassing X Holdings, sparking discussions about potential collaboration. While no plans have been confirmed, the rumors have increased interest in TMTG’s stock, which has been traded more as a “meme stock” than a reflection of its fundamentals.
As Trump gets ready to assume the presidency again, ethical questions about his TMTG stockholding are being raised. Federal rules might necessitate him to divest his shares to avoid conflicts of interest. In his previous term, Trump circumvented such conflicts by handing over business control to his sons, a strategy he could employ again. However, the federal scrutiny he now faces might exert additional pressure to put TMTG assets into a blind trust, especially considering the stock’s impact on his financial status.
