Former President Donald Trump’s Truth Social, launched in early 2022, has faced financial challenges, according to a new financial disclosure from Trump Media & Technology Group’s (TMTG) SPAC merger partner Digital World Acquisition Corp. The report revealed that while the platform took in $3.7 million in net sales, it also incurred a loss of $73 million. These numbers are the first public details on the internal finances of Truth Social, indicating that despite Trump promoting it as his primary social media platform, it has not been converting into substantial revenue for the tech startup.
In 2022, Truth Social saw a loss of $50 million on just $1.4 million of net sales, and through the first 6 months of 2023, it brought in $2.3 million in sales but experienced a loss of $23 million. The financial situation of TMTG is dire enough that its independent registered public accounting firm has raised concerns about the company’s ability to continue as a going concern.
The filing also raised doubts about TMTG’s ability to meet its liabilities and obtain additional funding through traditional financing sources, emphasizing that it may be difficult for the company to raise additional funds without material progress toward completing its merger with Digital World.
The consequence of not completing the merger and accessing additional funds poses a significant threat to TMTG’s survival. While TMTG was originally valued at $875 million, Trump’s latest financial disclosure valued his controlling stake at between $5-$25 million, a stark contrast to the initial valuation.
The amended S-4 filing also revealed updates and risk factors related to the company, including the elimination of several positions following a review of all departments, most significantly impacting TMTG’s streaming video on demand (SVOD) and infrastructure teams. The filing also hinted that the planned streaming video service may be off the table for now.
Trump initially announced his tech and media company in late 2021 to compete with big tech platforms like Facebook and Twitter. He subsequently agreed to make Truth Social his primary social platform in May 2022, refraining from posting on other platforms until 6 hours after he sends a “Truth.” However, Elon Musk’s acquisition of Twitter and reinstatement of Trump’s account as “X” have posed challenges to this agreement.
The filing detailed that Trump “verbally affirmed” that he will continue to honor the agreement at least until the completion of the merger. It also outlined various risks related to TMTG’s business and operations, including a section titled “Risks Related to our Chairman President Donald J. Trump,” highlighting his ongoing legal challenges, bankruptcies of companies he owned, and businesses that licensed his name and subsequently went out of business.
The company cautioned that there are no assurances that TMTG will not also fail, indicating a precarious future for the company. The filing ended with the note, “More to come,” suggesting that there may be further developments and challenges ahead for Truth Social and Trump Media & Technology Group.
