Copyright © BusinessAMBE 2023

Investors are reacting with shock to the rather meager revenue figures of Trump Media & Technology Group (TMTG), the company above the app Truth Social. TMTG made its debut on Wall Street just last week with much fanfare, greatly inflating the fortunes of main shareholder Donald Trump on paper.

The figure: TMTG's revenue last year clocked in at barely $4.13 million, the company announced in a stock market filing. That's a sloppy 200 times less than that other social media company that made its stock market debut, Reddit.

Moreover, the number of regular users is also unclear. The company speaks only of 8.9 million "signups." In any case, that is considerably less than Reddit's daily user base (73 million) and a mere trifle compared to Facebook's 2.1 billion users.

Also troubling: the net loss came to more than $58 million, or about fourteen times revenue. The independent auditor even writes "there is significant doubt about the ability to continue as a going concern."

Game of billions

The stock market reaction: The stock plunged more than 21 percent Monday, closing at $48.66, which is lower than the price at its IPO.

  • That does mean the company remains a billion-dollar company, with a market capitalization of $6.6 billion, down from a peak of more than $10 billion last week.
  • By comparison, Reddit is valued at $7.5 billion.
  • Those big swings also logically translate into the paper assets of ex-president and presidential candidate Donald Trump, who owns 57 percent of the shares. His stake went from more than $6 billion worth at the peak to just under $3.8 billion after Monday's correction.
  • Those billions are virtual for now, as Trump is not allowed to sell or borrow against any of his shares for six months, according to the agreements. The ex-president, the narrow favorite for the White House according to the latest polls, can put the money to good use for his numerous lawsuits.

Conclusion: All indications are that TMTG was severely overvalued, especially based on the usual standards used for social media companies. Truth Social doesn't even play in the category of niche player Reddit, let alone in the league of giants like Instagram or TikTok.

© The Content Exchange, source News