Trump Media & Technology Group Shares Plummet After Post-Merger Statements
Insights into Trump Media’s Financial Performance Cause Market Drop
The share price of Donald Trump’s media and technology group, Trump Media & Technology Group (TMTG), experienced significant losses following the release of post-merger financial statements. These statements, submitted to the Securities & Exchange Commission, revealed new details about the company’s business.
The parent company of social media platform Truth Social, TMTG plummeted in value, dropping by as much as 27% by lunchtime on Monday. It opened at $61.92 before the decline.
The regulatory filing disclosed that TMTG achieved revenue of $4.1 million in 2023, but also disclosed significant net losses of $58.2 million for the same period. In 2022, the company reported a profit of $50.5 million.
The market debut of TMTG on the Nasdaq under the symbol DJT initially saw the share price reach $79. However, it soon dropped to $47 before slightly rebounding to close at $48.66, representing a decline of 21.47% for the day.
Parallels with Meme Stock Craze Observed
Industry analysts have started comparing the fervor surrounding Trump Media to the meme stock craze that catapulted struggling companies like GameStop and AMC Entertainment to extraordinary heights in 2021. It is worth noting that these “meme stocks” experienced a decline on Monday, with GameStop and AMC down 7% and 11% respectively. Reddit, another recently listed company linked to meme stock frenzy comparisons, also saw a drop of over 6%
Challenges and Risks for Trump Media & Technology Group
Research firm Similarweb estimates that Truth Social had approximately 5 million monthly visits in February 2023. However, in comparison, Facebook had 15.2 billion visits, and Reddit had 2 billion.
The regulatory filing outlined that Trump Media & Technology Group faces greater risks, specifically due to the focus of its offerings and the involvement of former President Trump. Risks mentioned include the harassment of advertisers and criticism of Truth Social’s content moderation practices. The company is also aware that the value of its brand may decline if the popularity of President Trump were to suffer.
The filing further highlighted that stakeholders, including the former president, are under a six-month lockup period, preventing them from selling or transferring shares. This lockup period, commonly used to retain confidence in a company’s future, applies to President Trump, who could potentially make billions if the company’s value stabilizes.
The Birth of Truth Social
Former President Donald Trump established Truth Social after being banned from Facebook and Twitter following the January 6, 2021, Capitol riot.
Unveiling a glimpse into the Post-Merger Financial Statements, Trump Media & Technology Group experienced significant market losses. The share prices tumbled due to reported losses and lower revenue figures. The company’s challenges include competition with established social media platforms while coping with risks and potential consequences related to its association with President Trump.
With Additional Reporting by Our News Agencies
