Former President Donald Trump’s Truth Social platform finds itself in sharp contrast to the success witnessed by Reddit, which recently celebrated a triumphant IPO.

KEYPOINTS:

• Sharp Decline in DWAC Stock: Following shareholder approval of the merger between Digital World Acquisition Corp. (DWAC) and Trump’s social media company, DWAC shares plummeted nearly 14%.

• Financial Concerns: There are concerns about Trump Media & Technology Group’s ability to generate revenue, with reported losses of nearly $50 million and minimal revenue in recent financial quarters.

• Legal Troubles: Trump faces significant civil judgments exceeding half a billion dollars and mounting legal bills from multiple cases.

While Trump exclaims his adoration for Truth Social, investors appear less enamored, as reflected by a significant downturn in stock price following the merger vote with Digital World Acquisition Corp.

The merger, initially met with optimism as DWAC shares soared to a 52-week high, has now faced a harsh reality check.

Shareholder approval precipitated a nearly 14% plunge in DWAC stock, signaling potential challenges ahead for Trump’s majority stake in the newly formed Trump Media.

With DWAC shares closing at $36.94, concerns linger regarding the platform’s ability to generate substantial revenue, compounded by Trump’s mounting legal troubles.

Donald Trump started the Truth Social media network after he was banned from Twitter, following the January 6 attack on the Capitol.

Financial viability

Despite Trump’s proclamation of affection for Truth Social, doubts persist regarding its financial viability.

Trump Media & Technology Group reported significant losses and minimal revenue in recent financial quarters, casting shadows over its long-term prospects.

Trump’s Truth Social: A $3.5 billion windfall awaits

Trump’s legal battles, including civil judgments exceeding half a billion dollars, raise questions about his ability to navigate the company’s financial affairs.

Truth Social’s valuation is completely out of whack and will likely attract short sellers.

Consider: Reddit is worth $7.5B and has revenues of $800m, while Truth Social is “worth” $5B on revenues of $5m. This is quite literally a Potemkin company; reality will catch up.

— Dave Troy (@davetroy) March 23, 2024

The six-month restriction on Trump’s ability to sell shares offers a temporary respite, but the potential for an early lift on this restriction poses further uncertainties.

Trump’s involvement, coupled with the composition of the new board of directors, including his son Donald Trump Jr., underscores the intricate intersection between business interests and legal entanglements.